UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20072010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 000-14740
North American Nickel Inc. (formerly Widescope Resources Inc.)
(Exact name of Registrant as specified in its charter)
Province of British Columbia, Canada
(Jurisdiction of incorporation or organization)
#208#301 - 828 Harbourside Drive,260 West Esplanade, North Vancouver, British Columbia, Canada V7P 3R9V7M 3G7
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Common Shares, no par value
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act. None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common shares as of the close of the period covered by the annual
report:
12,227,28335,231,730 inclusive of the conversion of the outstanding Series 1
Convertible Preferred Shares
Indicate by check mark if the registrant is a well-known seasoned issuer.
[ ] Yes [X] No
If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934. [ ] Yes [X] No
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.
[ ] Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer
Indicate by check mark which financial statement item the registrant has elected
to follow. [X] Item 17 [ ] Item 18
If this is an annual report, indicate by check mark whether the registrant is a
shell company as defined in Rule 12b-2 of the Exchange Act. [ ] Yes [X] No
Unless otherwise indicated, all references herein are expressed in Canadian
dollars and United States currency is stated as "U.S.$__________."
THIS SUBMISSION SHOULD BE CONSIDERED IN CONJUNCTION WITH PREVIOUSLY FILED FORMS
20-F AND 6-K. THE AUDITED FINANCIAL STATEMENTS AND NOTES THERETO ATTACHED ARE AN
INTEGRAL PART OF THIS SUBMISSION.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not required
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not required
ITEM 3. KEY INFORMATION
A. SELECTED FINANCIAL DATA.
The following selected financial data has been extracted from the consolidated
financial statements for the last five years prepared pursuant to Canadian
generally accepted accounting principles ("GAAP"). Where material differences
exist between Canadian and US GAAP, corresponding comparison data has been
provided in US GAAP for clarity.
North American Nickel Inc. (formerly Widescope Resources Inc.) (the "Company")
was incorporated on September 23, 1983. The Company changed its name from
Widescope Resources Inc. to North American Nickel Inc. effective April 19, 2010.
The Company's principal business activity is the exploration of natural resource
properties.
Effective April 19, 2010 the Company's shareholders approved a special
resolution to reorganize the Company's capital structure by consolidating in a
reverse stock split the existing common shares on the basis of each two (2) old
shares being equal to one (1) new share and concurrently increasing the
authorized capital of the Company from 100,000,000 common shares without par
value to an unlimited number of common shares without par value. All references
to common shares, stock options, warrants and weighted average number of shares
outstanding in this Form 20-F retroactively reflect the share consolidation
unless otherwise noted. The net effect of the above was to reduce the existing
outstanding common shares from 10,883,452 to 5,441,730.
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WIDESCOPE RESOURCES INC.North American Nickel Inc.
(formerly Widescope Resources Inc.)
Selected Financial Data in accordaceaccordance with United States GAAP
(Expressed in Canadian Dollars)
Years Ended December 31,
2010 2009 2008 2007 2006 2005 2004 2003
---------- ---------- ---------- ---------- ----------
Net operating revenues $ 0 9,689 0 20,000 3,0000 0 9,689
Loss from continued operations $ (60,556)0 (35,773) (59,776) (56,820) (370,305) (54,804) (39,742) (37,863)
Income from discontinued
operations $ N/a N/a N/a N/a N/a
Net loss $ (60,556)(693,318) (117,645) (205,221) (56,820) (370,350)
(54,804) (39,742) (37,863)Comprehensive loss $ (717,843) (93,120) (205,221) (56,820) (370,350)
Loss per share from continued
operations $ (0.04) (0.02) (0.04) (0.01) (0.03) (0.01) (0.00) (0.00)
Income per share from
discontinued operations $ N/a N/a N/a N/a N/a
Income per share after
discontinued operations $ N/a N/a N/a N/a N/a
Share capital $ 15,310,333 13,649,333 13,649,333 13,499,333 13,265,283 13,265,28313,649,333 13,649,333
Common shares issued 10,883,452 10,883,452 9,883,452 8,323,119 8,323,11935,231,730 5,441,730 5,441,730 5,441,730 5,441,730
Weighted average shares
outstanding 10,883,452 10,383,452 9,084,049 8,323,119 8,323,11919,941,566 5,441,730 5,441,730 5,441,730 5,191,726
Total assets $ 1,186,192 153,074 46,312 74,339 110,607 218,438 53,870 49,070
Net assets (liabilities) $ 1,036,301 (75,148) (106,684) (104,642) (44,086) 176,219 (3,027) 36,715
Convertible debentures(current
and long term portions) $ N/a N/a N/a N/a N/a
Cash dividends declared per
common share $ 0 0 0 0 0
Exchange rates (Cdn$ to U.S.$)
period average $ .9709 0.8757 0.9371 0.9304 0.8818
0.8253 0.7683 0.7135Exchange rates (CDN$ to U.S.$)
for most recent six months
Period High Period Low
----------- ----------
October 2010 $ 0.9970 0.9690
November 2010 $ 0.9987 0.9743
December 2010 $ 1.0054 0.9825
January 2011 $ 1.0138 0.9978
February 2011 $ 1.0268 1.0045
March 2011 $ 1.0026 1.0340
Exchange rate (CDN$ to U.S.$)
April 19, 2011 $ 1.0319
3
Exchange rates (CDN$ to U.S.$)
for most recent six months
Period High Period Low
----------- ----------
December 2007 $ 1.0205 0.9756
January 2008 $ 1.0096 0.9686
February 2008 $ 1.0298 0.9814
March 2008 $ 1.0206 0.8521
April 2008 $ 0.9975 0.9737
May 2008 $ 1.0158 0.9815
Exchange rate (CDN$ to U.S.$)
June 23, 2008 $ 0.9840
B. Not required
C. Not required
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D. RISK FACTORS.
The business of the Company entails significant risks, and an investment in the
securities of the Company should be considered highly speculative. An investment
in the securities of the Company should only be undertaken by persons who have
sufficient financial resources to enable them to assume such risks. The
following is a general description of all material risks, which can adversely
affect the business and in turn the financial results, ultimately affecting the
value of an investment the Company.
THE COMPANY HAS NO VIABLE COMMERCIAL BUSINESS.
Having no viable business it is difficult to determine a price for the
common shares. That price must therefore be dependent on the value that
each individual buyer and seller place on the future prospects of the
company, rather than any objective measurement. This is a very risk
position for shareholders, as the majority perception may turn negative and
price decline severely.
THE COMPANY HAS LIMITED FUNDS.
Funds are the fuel needed to drive the company. Should current funds be
consumed, and the company not be able to attract more capital, prospects
for shareholders would become extremely negative, and shareholder losses
will inevitably occur. THERE IS NO ASSURANCE THAT
THE COMPANY CAN ACCESS ADDITIONAL CAPITAL.
The company will need to demonstrate performance in order to attract
additional capital. As the mineral exploration business has a high element
of chance associated with it, it is possible that none of the current
properties will have any value. The capital markets could perceive this to
be a demonstration of poor performance, and be unwilling to provide
additional funds. Should this happen, shareholders will incur significant
losses.
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THERE IS NO ASSURANCE THAT THE TRANSACTIONTRANSACTIONS DISCLOSED HEREIN WITH PINEFALLS
GOLD WILL BE
SUCCESSFUL IN ITS QUEST TO FIND A COMMERCIALLY VIABLE QUANTITY OF MINERAL
RESOURCES.
Unless the companyCompany is able to secure other more viable projects, providing
better future prospects, buyer interest for common shares will decline
severely, resulting in lower prices and significant shareholder losses.
THERE IS NO ASSURANCE THAT OTHER PROSPECTIVE MINERAL PROPERTIES OR OTHER
ASSETS CAN BE ACQUIRED, AND IF ACQUIRED THAT THE NECESSARY ADDITIONAL
CAPITAL CAN BE ATTRACTED. Either of these is possible. Either occurring
will have the same inevitable outcome. Demand for the common shares will
decline severely, resulting in a drop in trading price, and significant
shareholder losses.
THE COMPANY HAS A HISTORY OF OPERATING LOSSES AND MAY HAVE OPERATING LOSSES
AND A NEGATIVE CASH FLOW IN THE FUTURE.
This will mean that additional shares will need to be sold to fund
operations. Without a concurrent improvement in future prospects, this will
result in supply of stock exceeding demand, and much lower prices. This
will cause shareholders to lose money.
THE COMPANY'S AUDITORS HAVE INDICATED THAT U.S. REPORTING STANDARDS WOULD
REQUIRE THEM TO RAISE A CONCERN ABOUT THE COMPANY'S ABILITY TO CONTINUE AS
A GOING CONCERN.
Additional capital will need to be raised. This could result in the
perception of lowered future prospects, lower demand for the company'sCompany's
common share, lower stock prices, and shareholder losses.
THERE CAN BE NO ASSURANCE THAT A LIQUID MARKET WILL DEVELOP FOR THE
COMPANY'S SHARES AND THEREFORE NO ASSURANCE THAT SHAREHOLDERS WILL BE ABLE
TO SELL THEIR SHARES.
Lack of liquidity that prevents shareholders from selling, or limits their
abilities to sell, will all too likely lead to significant losses for
shareholders.
MANAGEMENT HAS LITTLE EXPERTISE IN MINING OR EXPLORATION,, WHICH MAY ULTIMATELY CAUSE
SHAREHOLDERS TO LOSE MONEY.
Management may waste the company'sCompany's limited capital on worthless properties,
or it may do the wrong things with properties that could have value. Either
4
way, the outcome will be the same. Money will have been wasted without any
corresponding creation of value. This will cause shareholders to lose
patience and lose interest. This could lead to significantly increased
selling of shares, driving down the price, and leading to losses for
investors.
THE COMPANY'S COMMON STOCK IS THINLY TRADED SO IT IS MORE SUSCEPTIBLE TO
EXTREME RISES OR DECLINES IN PRICE, AND YOU MAY NOT BE ABLE TO SELL YOUR
SHARES AT OR ABOVE THE PRICE PAID.
You may have difficulty reselling shares of our common stock, either at or
above the price paid, or even at fair market value. The stock market often
experiences significant price and volume changes that are not related to
the operating performance of individual companies, and because our common
5
stock is thinly traded it is particularly susceptible to such changes.
These broad market changes may cause the market price of our common shares
to decline, regardless of how well the company performs. This may be
exaggerated by the fact that the shares trade on the over-the-counter
bulletin board ("OTCBB"), which althoughis owned and operated by the NASDAQ Stock Market Inc., is not the same as the NASDAQ.Financial
Industry Regulatory Authority ("FINRA"). Trading on the OTCBB is often
extremely sporadic, and subject to manipulation by market-makers, and short
sellers. This may cause you to lose money as you may have difficulty
selling the shares that you own.
THE COMPANY'S COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" REGULATIONS,
WHICH ARE LIKELY TO MAKE IT MORE DIFFICULT TO SELL.
A "penny stock" is generally a stock trading under $5.00 per share, and not
registered on a national securities exchange or quoted on the NASDAQ
national market. The SEC has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. These rules,
intended to protect investors, generally have the result of reducing
trading in such stocks, restricting the pool of potential investors, and
making it more difficult for investors to sell their shares once acquired.
Since our common shares are subject to the "penny stock" rules, you may
find it more difficult to sell your shares.
AS A FOREIGN ISSUER, THE COMPANY IS EXEMPT FROM CERTAIN INFORMATIONAL
REQUIREMENTS OF THE EXCHANGE ACT TO WHICH DOMESTIC ISSUERS ARE SUBJECT.
As a foreign issuer we are not required to comply with all of the
informational requirements of the Exchange Act. As a result, there may be
less information concerning our company publicly available than if we were
a domestic United States issuer. In addition, our officers, directors, and
principal shareholders are exempt from the reporting and short profit
provisions of Section 16 of the Exchange Act, and the rules promulgated
thereunder. Therefore, our shareholders may not know on a timely basis when
our officers, directors, and principal shareholders purchase or sell shares
of our common stock.
AS A CANADIAN COMPANY WITH MOST ASSETS AND KEY PERSONNEL LOCATED OUTSIDE
THE UNITED STATES, YOU MAY HAVE DIFFICULTY IN ACQUIRING UNITED STATES
JURISDICTION, OR ENFORCING A UNITED STATES JUDGMENT AGAINST US, OUR KEY
PERSONNEL, OR ASSETS.
As a Canadian company many of our assets and key personnel, including
directors and officers, reside outside the United States. As a result, it
may be difficult or impossible for you to effect service of process within
the United States upon us or any of our key personnel or to enforce against
us or any of our key personnel judgments obtained in United States' courts,
including judgments relating to United States federal securities laws.
Canadian courts may not permit you to bring an original action in Canada,
or recognize or enforce judgments of United States courts obtained against
us predicated upon the civil liability provisions of federal securities
laws of the United States, or of any state thereof. Furthermore, because
many of our assets are located in Canada, it would be extremely difficult
to access these assets to satisfy any award entered against us in a United
States court. Accordingly, you may have more difficulty in protecting your
interests in the face of actions taken by our management, members of our
board of directors, or our controlling shareholders than you would
otherwise as shareholders of a United States public company.
6
THE COMPANY DOES NOT INTEND TO PAY ANY COMMON STOCK DIVIDENDS IN THE
FORESEEABLE FUTURE.
We have never declared or paid a dividend on our common stock, and, because
we have very limited resources, we do not anticipate declaring or paying
5
any dividends in the foreseeable future. It is unlikely that the holders of
our common shares will have an opportunity to profit from anything other
than potential appreciation in the value of our common shares. If you
require dividend income, you should not rely in an investment in our common
shares to provide it.
FUTURE ISSUANCES OF COMMON STOCK MAY DEPRESS STOCK PRICES AND DILUTE YOUR
INTEREST.
We may issue additional shares of our common stock in future financings, or
grant stock options to our employees, officers, directors, and consultants
under our stock incentive plan. Any such issuances could have the effect of
depressing the market price of our common stock, and, in any case, would
dilute the percentage ownership interests in our company of our
shareholders. In addition we could issue securities having rights,
preferences and privileges senior to those of our common shares. This could
depress the value of our common shares.
ITEM 4. INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY.
The Company was incorporated under the laws of the Province of British Columbia,
Canada, by filing of Memorandum and Articles of Association on September 20,
1983, under the name Rainbow Resources Ltd. The company'sCompany's name was changed to
Widescope Resources Ltd. on May 1, 1984, and to Gemini Technology Inc. on
September 17, 1985. In conjunction with a reverse split of its common shares on
a five-old for one-new basis, the Company adopted the name International Gemini
Technology Inc effective September 23, 1993. The Company's name was changed to
Widescope Resources Inc., effective July 12, 2006 Registrant2006. Effective April 19, 2010 the
Company's shareholders approved a special resolution to reorganize the Company's
capital structure by consolidating in a reverse stock split the existing common
shares on the basis of each two (2) old shares being equal to one (1) new share
and concurrently increasing the authorized capital of the Company from
100,000,000 common shares without par value to an unlimited number of common
shares without par value. Also effective this date the Company's name was
changed to North American Nickel Inc. to reflect its new focus. All references
to common shares, stock options, warrants and weighted average number of shares
outstanding in accompanying financial statements retroactively reflect the share
consolidation unless otherwise noted. The Company is currently in good standing
under the laws of British Columbia. The registered and records office of the
Company are located at #1750 - 1185 West Georgia Street, Vancouver, B.C. Canada
V6E 4E6 and the Company's principal executive offices are located at #208#301 - 828 Harbourside Drive260
West Esplanade, North Vancouver, British Columbia V7P 3R9,BC, V7M 3G7, telephone 604-904-8481.
From September 1985(604) 986-2020.
In April 2010 the company became involvedCompany initiated a series of actions to realign its focus
into the field of nickel exploration in the designprolific nickel belts around
Sudbury, Ontario and marketing of a
circuit board for a Zenith computer that allowed it to emulate an IBM PC and
utilize much of the related software. Over the next year it broadened its
product line to include proprietary computer graphics chips, custom electronic
components and equipment. As the line of proprietary computer graphics chipsThompson Manitoba. These actions were in final development, the demand for the circuit boards for the Zenith
computer ended.
The company licensed its graphics chips to third parties, and concentrated on
developing second and third generation products. Due to cash flow problems
brought about by external and unforeseeable circumstances and bad management
decisions the company was forced into a position of attempting to develop a new
generation product with little cash.
In August of 1989 the board changed direction and top management. The new
strategy was to accelerate R&D on a new product, targeting a small number of
very large customers. With little cash and little ongoing revenue, the
inevitable delays to the R&D process caused the company to be unable to meet
payroll in February 1990. All of management resigned and the board of directors
7
was changed. The shareholders spearheaded an effort to save the Company, which
eventually resulted in the change to the board of directors and a plan to revive
the Company's operations.
During 1991 the Company concentrated considerable effort on establishing a joint
venture in Czechoslovakia to exploit the European market, as well as effort to
establish a considerable technical presence in the Middle East. In addition,
contracts and joint ventures were pursued in Russia, Singapore and Taiwan. None
of these efforts yielded tangible results.
A great deal of time and energy was expended in 1993 and 1994 in an effort to
target and conclude an acquisition that would be complimentary to Gemini's
technical and financial capabilities. This effort continued through 1996, and at
the end of 1996 has been unsuccessful. In July of 1997, Gemini entered into
discussions to acquire the assets and intellectual property of Abraham
Publishing Group Inc. and certain other privately owned assets which in
combination operate as a profitable publishing business. These discussions and
negotiations had not been concluded by the end of 1997, but in the first quarter
of 1998 resulted in an acquisition agreement with closing conditional on raising
US$3.25 million in expansion capital.
Closing had not taken place by the end of 1998 due to small cap market
conditions frustrating efforts to raise the required capital. Initiatives were
undertaken to identify and review other potential acquisition or mergers
requiring less capital.
The dot.com frenzy in the years 1999 and 2000 distorted valuations and made any
prospective acquisition prohibitively expensive. The return to more normal
valuations after mid 2000 has resulted in fewer but more reasonably priced
prospective candidates. However as valuations became more reasonable the sources
of funding became fewer. And the events of September 11 virtually shut down the
availability of funding for most smaller transactions, particularly the size
targeted by the company. Toward the end of the year discussions were entered
into on a proprietary medical device, which had met some amount of successreported in a niche market in Texas. At yearend discussions were progressing, particularly as
it appeared that this device could be sold in considerable quantity by the
application of effective marketing. This was abandoned as marketing was found
not to be the greatest challenge. The greatest challenge was providing the
paperwork for the multiplicity of insurers ultimately paying for the use of the
device.
During 2002 due diligence was done on two businesses, but neither was able to
demonstrate the business case necessary for expansion financing. Accordingly
neither was pursued further as a merger or acquisition candidate, despite one
being in the bus shelter advertising business, a business usually demonstrating
generally attractive economics.
During 2003 due diligence was done on several more businesses. All but one were
abandoned as not being able to support the additional financing required to
close. One of those abandoned became the subject of further review toward the
end of the year as the owners lowered their price expectation. At year end,
alternatives were being considered including merging with a like business, also
available. A separate business was the subject of low level investigation
throughout the year, as it was fairly early stage. It remained under observation
at year end, having made considerable business progress.
During 2004 alternatives in the resource sector were explored. Oil and gas
projects were investigated, and one in particular was the subject of
considerable attention. Increasing energy prices brought with them increasing
expectations on the part of the owners of that project, ultimately causing
interest to wane. Precious metals projects continued to be reviewed as the entry
8
cost was deemed to be lower, and expenditures in minerals exploration appeared
to be more controllable. Toward the end of 2004, the Directors were
contemplating making a proposal on one particular project.
A proposal was made on a precious metals mining prospect in 2005. The precious
metals prospect is comprised of some 2800 hectares in the Rice Lake Mining area
of the Province of Manitoba, Canada. The property is just over 3 miles from a
mine that had produced over 1.3 million ounces of gold before being closed
because it became uneconomic at $35 per ounce gold. (This mine has now been
reopened.) The company carried out early stage geological and related work
during 2005, through an investment in the company owning the mining claims.
In 2006 further work was done on the prospect, In accordance with the terms of
the agreement with the owners of the prospect the cost of work done effectively
resulted in the company acquiring ownership in the company owning the prospect.
This, combined with the exercise of an option agreement with one of the owners,
results in Widescope now owning just over 65% of the company owning the
prospect.
In 2007 due to unavailability of qualified personnel no significant work was
undertaken on the claims in the Rice Lake Mining area.news
release dated April 6, 2010.
B. BUSINESS OVERVIEW
In April 2005 the Company entered into a subscription agreement to invest
$200,000 into Outback Capital Inc. dba Pinefalls Gold ("PFG") a private Alberta
company with certain directors and a principal shareholder of PFG in common with
the Company.
PFG is an exploration companyIn conjunction with mining claims located in the areaApril 2010 refocusing of Bissett, Manitoba. Pursuant to the subscription the Company invested
$90,000 in exchange for 1.8 million units during 2005 and an additional $110,000
in exchange for 2.2 million units in 2006on nickel
exploration, as of PFG at $0.05 per unit with each
unit comprised of one common share and one share purchase warrant to purchase an
additional common share at $0.075 for a period of two years. Without the
exercise of the warrant the Company purchased approximately 37% of the common
shares of PFG. As at June 30, 2006, the Company had invested $200,000 in
exchange for 4 million units under this subscription agreement.
In addition,April 23, 2010 the Company entered into a share exchangean agreement with one of the
principal shareholders of PFG, a director of the Company, under which the
Company acquired a further 3 million common shares of PFGan
independent third party that resulted in exchange for one
million common shares of the Company. As a result of the share exchange
agreement, the director in common no longer has an ownershipdivesting its interest in PFG.
As at June 26, 2007 the Company's owns 65.42% of the common shares of PFG.
PFG has been actively exploring for mineral resources onOutback
Capital Inc., and its seventeen (17)
mining claims in the area of Bissett, Manitoba. The claims are includedremaining interest in the Rice Lake greenstone belt and cover an area of approximately 2800 hectares.properties. The claims are the subject of Qualifying Reports dated May 1, 2006 and June 30, 2004
prepared by Edward Sawitzky, P. Geo. of Arc Metals Ltd. ("Arc"). Arc prepared
the report to standards dictated by National Instrument 43-101.
Following the recommendations of the May 2006 Qualifying Report - during the
summer of 2006 an exploration programsale
was completed under PFG's direction. The
primary focusas of May 31, 2010, and the work plan was to complete more detailed geological mapping
9
of the claims, stripping of over-burden and grab sampling. Approximately 30
man-days of field work were completed and more than seventy samples were
collected and delivered to TSL Laboratories in Saskatoon for assay and analysis.
Subsequent to the year-end the Company has received the detailed geologist's
maps, data and assay results. Review of these materials plus the detailed report
of the activities, findings and recommendations are under review by the Company.
This review, and a small amount of professional work represent the total of the
progress made in 2007, to some extent due to the inability to attract a
geologist to the short work window the Company wanted.
The Company remains optimistic about the prospect for discovery of a definable
mineral resource on its claims in Manitoba. However, its exploration to date has
failed to immediately delineate the indicators required to step-up to a drilling
program. Further groundwork will be required to elevate the status of the claims
to drill-ready. Cautious optimism was gainedproceeds from the reported success of the
local San Gold Corp., in extending existing gold bearing veins and discovering
new ones, by deeper drilling below their existing San Antonio mine site.
There is some seasonality to mineral exploration in that part of Manitoba. The
groundwork required to elevate the status of the claims to drill-ready is best
conducted during the summer. The soil and surface rock is more easily and
economically accessed when there is no snow cover. Actual drilling is most
easily carried out in the winter, as some of the surrounding area contains swamp
land, and access is much easier over frozen ground.sale were $52,606.
6
In conducting its business operations, the Company is not dependent on any
patented or license processes, technology, industrial, commercial or financial
contract or new manufacturing processes.
The Company competes with other exploration companies, some of which have
greater financial resources and technical facilities, for the acquisition of
mineral interests, as well as for the recruitment and retention of qualified
employees. Exploration in Manitoba has experienced a dramatic revival in recent
years and increased activity is forecast for the future. We compete for
qualified employees with other Canadian companies, including Harvest Gold Corp.,
Grandview Gold Inc., and San Gold Corp. amongst others.
With the dramatic and possibly unprecedented contraction of global financial
markets experienced in 2008, a tidal wave of qualified people became available.
Suddenly, capital became unavailable. Exploration companies everywhere reduced
overhead.
Access to capital eased marginally toward the latter part of 2009 and beyond.
More capital became available, and enthusiasm for mining projects increased at
much the same time. The latter, because of expectations of increased inflation,
brought increased demand for precious metals and because of the expectation of
an increasing demand for base metals from Asia.
To focus on the expected increased demand for base metals, the Company has
entered into agreements to acquire rights to four properties in the Sudbury
Ontario nickel belt, and one agreement to acquire 100% ownership of another
property in the area of the Thompson Manitoba nickel belt. As part of this
change in focus, the Company has entered into an arms length agreement to divest
its interest in Outback Capital Inc., and through this, its interest in the Pine
Falls Manitoba gold properties.
The Company arranged two non-brokered private placements to finance working
capital and the first exploration work at Post Creek and Bell Lake in the
Sudbury nickel belt. It has also attracted four new directors, each with
significant experience in mineral exploration, to replace three previous
directors, and add one additional director.
C. ORGANIZATIONAL STRUCTURE.
The Company is part of no other group. During the year ended June 30, 2006
Outback Capital Inc. dba Pinefalls Gold ("PFG") a private Alberta corporation
became a majority-owned subsidiary of the Company. PFG was incorporated under
the Alberta BUSINESS CORPORATIONS ACT on February 6, 2001. During the year, the
Company entered into an agreement with an arms length entity that resulted in it
divesting of its interest in Outback Capital Inc.
D. PROPERTY, PLANTS AND EQUIPMENT.
The Company's head office and principal facility, which is leased, is located at
828 Harbourside Drive,260 West Esplanade, North Vancouver.
Its only otherThe Company has entered into four agreements to acquire rights to the Post
Creek, Bell Lake, Woods Creek and Halcyon properties in the Sudbury, Ontario
nickel belt; and an agreement to acquire up to a 100% ownership of the
high-grade Ni-Cu-PGE South Bay property near Thompson and the large grassroots
Thompson North and Cedar Lake properties, which are part of the world-class
Thompson Nickel Belt.
7
SUDBURY NICKEL PROPERTIES:
POST CREEK: The property is its interestlocated 35 km east of Sudbury in Norman and Parkin
townships and consists of 35 contiguous unpatented mining claims and one
isolated claim covering an area of 688 hectares. It is strategically located
adjacent to the producing Podolsky copper-nickel-platinum group metal deposit of
FNX Mining. The property lies along the extension of the Whistle Offset Dyke
Structure which is a major geological control for Ni-Cu-PGM mineralization. This
structure hosted the former INCO Whistle Offset copper-nickel-PGM Mine (5.7
million tons grading 0.33% Cu, 0.95% Ni and 3.77 g/t total platinum metals as
well as the Podolsky North and Podolsky 2000 copper-precious metal deposits. FNX
forecast the production of 372,049 tons of ore at Podolsky yielding 1.8 million
pounds of payable nickel, 28.5 million pounds of payable copper and 27,300
ounces of payable platinum, palladium and gold for 2009. Previous operators
located the extension of the Whistle Offset Dyke structure on the Post Creek
property as a direct result of their geological, geophysical and Mobile Metal
Ion geochemical surveys. Drilling on this structure intersected a 0.66 m near
solid to solid sulphide zone with 0.48% copper, 0.08% nickel, 53 parts per
billion (ppb) palladium, 34 ppb platinum and 20 ppb gold. A rock sample
collected along the structure assayed 0.83% Ni, 0.74% Cu, 0.07% Co, 2241 ppb Pt
and 1051 ppb Pd. Significant potential for nickel-copper-PGM is demonstrated on
the Post Creek property.
A NI 43-101 compliant Technical Report has been commissioned, with Dr. Walter
Peredery, formerly of INCO, as the author.
BELL LAKE: The Bell Lake property is a 256 acre property that covers
approximately 1 km of the Mystery Offset Dyke or "MOD". The MOD is interpreted
to be an extension of the Worthington Offset Dyke which is a 10-11 km long
mineralized structure that extends from the southwest margin of the Sudbury
Igneous Complex. Offset Dyke environments are significant hosts to
nickel-copper-PGM mineralization in the mineralSudbury Basin. The Worthington Offset
Dyke hosts the past producing Worthington Mine and the Victoria Mine (1.5
million tons of 2.2% copper, 1.5% nickel and 2.3 g/t total precious metals). It
is also host to Vale Inco's Totten Mine development (10.1 million tons at 1.5%
nickel, 2% copper and 4.8 g/t platinum group metals). Crowflight Minerals
AER-Kidd property also occurs within the Worthington Offset. The Bell Lake
property is marked by surface exposures of disseminated to near-solid
nickel-copper sulphide mineralization with PGM values. The Mystery Offset Dyke
offers excellent exploration potential for the discovery of additional
nickel-copper-PGM mineralization. Deep-looking ground geophysical technologies
and diamond drilling will test the property after detailed geological mapping
has been undertaken on the property.
HALCYON: The property is located 35 Km NNE of Sudbury in the SE corner of Parkin
Twp, and consists of 46 unpatented mining claims. It is readily accessible by
paved and all-weather gravel road. Halcyon is adjacent to the Post Creek
property and contains the extension of the metallogenetically significant
Whistle Offset Structure. It is approximately 2 km north of the producing
Podolsky Mine of FNX Mining. Previous operators on the property defined numerous
conductive zones based on induced polarization (I.P.) surveys with coincident
anomalous soil geochemistry. Base and precious metal mineralization have been
found in multiple locations on the property but follow-up work was never done.
The former producing Jon Smith Mine (nickel-copper-cobalt-platinum) is situated
1 Km North of the property.
WOODS CREEK: The Woods Creek claim block is located in Hyman Township about 50
km west of Sudbury and comprises eight contiguous unpatented mining claims
referenced above, held through its ownershipcovering 1,264 hectares. The target on the property is disseminated to
near-solid nickel-copper-cobalt-PGM mineralization hosted within Nipissing
Diabase dykes which cover 50% of the property. This style of mineralization is
currently being mined by Ursa Major Minerals at their Shakespeare deposit 15 km
southwest of the Woods Creek property. It contains 7,301,000 tons grading 0.37%
Ni, 0.39% Cu, 0.024% Co, 0.37 g/t Pt, 0.40 g/t Pd and 0.20 g/t Au.
8
Previous operators defined a number of mineralized zones on the Woods Creek
property, but little follow-up exploration was undertaken. The Main Zone
prospect is a zone of 10-40% pyrrhotite-chalcopyrite mineralization that assayed
1.22% Cu, 0.95% Ni, 354 ppb combined Pt and Pd and 136 ppb Au. Diamond drilling
on this zone intersected a 6.5 m section of gabbro with pyrrhotite and
chalcopyrite that assayed up to 1.09% Ni, 0.37% Cu, 301 ppb combined Pt and Pd
and 1110 ppm Co (0.11%). The Ravenshill prospect was discovered in PFG. PFG's
interest2005 as a
result of geological mapping and prospecting. It comprises near solid pyrrhotite
and chalcopyrite in these mineral claims requiresbrecciated gabbro with assays of 0.66% Ni, 0.90% Cu, 0.09%
Co, 68 ppb Pt, 227 ppb Pd and 46 ppb Au.
MANITOBA NICKEL PROPERTIES:
SOUTH BAY: Exploration was spurred at the South Bay property by the September,
2003 discovery of a zone of high-grade nickel mineralization. The
nickel-copper-cobalt platinum group element ("PGE") zone was found in one wall
of a new road cut 60 km east of the town of Leaf Rapids, Manitoba. The average
grade of eleven samples of near-solid sulphide collected from boulder-sized
blast rubble in the road cut exposure is 2.42 % Ni, 0.78 % Cu, 697 ppm Co and
1.32 g/t PGE. The mineralization is sedimentary-rock-hosted and exhibits similar
metal characteristics to ores associated with magma-derived nickel deposits that
annual work be done on these
claims in orderare mined at Thompson and worldwide. Airborne geophysical surveys (VTEM) have
been flown over the property and preliminary soil geochemical surveys have been
undertaken.
THOMPSON NORTH: The property overlies the world class Thompson Nickel Belt
("TNB") where Vale Inco continues to maintain them in good standing.mine nickel-copper-cobalt and platinum
group element mineralization hosted within sedimentary and mafic intrusive
rocks. Based on work doneresearch by the Manitoba Geological Survey the northeastern
extension of the TNB has been traced through the Thompson North property making
the area highly attractive for repetitions of TNB mineralization. Airborne
geophysics (VTEM) has been flown over the property and numerous anomalous
magnetic and electromagnetic features identified. Follow-up exploration will be
based upon ranking and modeling of geophysics and soil geochemical surveys.
CEDAR LAKE: The property occupies the southern portion of the Thompson Nickel
Belt where previous exploration based on the drill-testing of geophysical
anomalies has identified key stratigraphic components that host producing
nickel-copper-cobalt and platinum group elements at the Thompson and Pipe Mines
of Vale Inco. Nickel mineralization has been intersected in drilling on adjacent
Mineral Exploration Licenses. The prospective rock units are overlain by younger
carbonate rocks and conceal the TNB in this area. The Company has undertaken
airborne geophysical surveys (VTEM) and delineated numerous conductive and
magnetic anomalies. These anomalies will be prioritized and drill tested
subsequent to date it
is estimated that they will remainsoil geochemical surveys.
All technical information in good standing until some time in 2009.
10
this Form 20-F has been reviewed by Dr. Mark
Fedikow, PGeo, the qualified person for North American Nickel Inc. under
National Instrument 43-101.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN (SEE ALSO
"SELECTED FINANCIAL DATA"). THE CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN
PREPARED IN ACCORDANCE WITH CANADIAN GAAP. REFER TO NOTE 713 TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR A DESCRIPTION OF TRANSACTIONS THAT WERE SUBJECT TO
MATERIAL MEASUREMENT DIFFERENCES BETWEEN CANADIAN GAAP AND U.S. GAAP UNDER ITEM
17.
9
OVERVIEW
With the acquisition of PFG effective June 30, 2006, the Company's primary focus
shifted to mineral resource exploration operations rather than acquisitions. The
Company charged PFG a modest management fee to offset its reciprocal efforts to
coordinate PFG's affairs until control of PFG was acquired. In 2006 PFG was
charged $9000$9,000 in management fees. This management function has been largely
carried out by the directors and large shareholders, at their own expense. The
Company's management team, affiliates and directors have special expertise in
the areas of operations, due diligence, financial analysis and corporate finance
strategy with respect to emerging growth enterprises. Additionally, the Company
retains Dockside Capital Group to provide certain management functions and in so
doing can also access its similar expertise.
From time-to-time the Company is approached, through referral, to provide these
services on a consulting basis. Thus the Company has generated some revenue by
providing these services. As these sources of revenue are not core to the
Company's focus, the services are not actively marketed. No consulting revenue
was earned in 2005, 2006, or 2007; however $20,000 was earned in 2004.
A. OPERATING RESULTS
Historically, the Company has shown modest losses for the past several years.
These losses result largely from having little or no revenue and minimal
operating expenses, rather than having significant operating and overhead
expenses. In 2004 the Company elected to sell its passive investment, and this
resulted in a loss that was somewhat greater than usual. Prior to the completion
of the PFG acquisition, the expenses of the Company were almost completely
related to satisfying regulatory requirements, including the annual meeting,
financial reporting, communications with shareholders; and seeking and
evaluating acquisition prospects for suitability and ability to attract
financing.
With the June 30, 2006 completion of the PFG acquisition the Company's expenses
are nowbecame more heavily weighted in favor of the exploration work and analysis being
carried out on the properties by PFG.
With the PFG acquisitionthose properties. On May 31, 2010 the Company expectssold its interest
in PFG and at December 31, 2010 no longer holds an interest in the Pinefalls
Gold Property. The Company will continue in the exploration business via the
April 2010 agreements to report significant additional
expenses relatedacquire rights to the exploration activities undertakenPost Creek, Bell Lake, Woods
Creek and Halcyon properties in the area of
Bissett, Manitoba.
11
BUSINESS OVERVIEW
In April 2005Sudbury, Ontario nickel belt; and the Company entered into a subscription
agreement to invest
$200,000 into Outback Capital Inc. dba Pinefalls Gold ("PFG") a private Alberta
company with certain directors and a principal shareholder of PFG in common with
the Company. PFG is an exploration company with mining claims located in the
area of Bissett, Manitoba. Pursuant to the subscription the Company invested
$90,000 in exchange for 1.8 million units during 2005 and an additional $110,000
in exchange for 2.2 million units in 2006 of PFG at $0.05 per unit with each
unit comprised of one common share and one share purchase warrant to purchase an
additional common share at $0.075 for a period of two years. Without the
exerciseacquire 100% ownership of the warranthigh-grade Ni-Cu-PGE South Bay
property near Thompson and the Company purchased approximately 37%large grassroots Thompson North and Cedar Lake
properties, which are part of the common
shares of PFG. As at June 30, 2006, the Company had invested $200,000 in
exchange for 4 million units under this subscription agreement.
In addition, the Company entered into a share exchange agreement with one of the
principal shareholders of PFG, a director of the Company, under which the
Company acquired a further 3 million common shares of PFG in exchange for one
million common shares of the Company.Thompson Nickel Belt.
As a result of initiatives that were announced on April 6, 2010, activities will
shift from the share exchange
agreement,Bissett area and precious metals, to base metals in and around
Sudbury Ontario, and Thompson Manitoba.
BUSINESS OVERVIEW
With the director in common no longer has an ownership interest in PFG.
As at June 23, 2008April 2010 entry into base metal exploration the Company's owns 65.42%Company is effectively
a new company with its first focus on its two key Sudbury properties. The Post
Creek property is strategically located adjacent to the producing Podolsky
copper-nickel-platinum group metal deposit of FNX Mining. The property lies
along the extension of the common shares of PFG.
PFG has been actively exploringWhistle Offset dike structure, which is a major
geological control for mineral resources on its seventeen (17)
mining claims in the area of Bissett, Manitoba.Ni-Cu-PGM mineralization. The claims are included in the
RiceBell Lake greenstone belt and cover an area ofproperty is a
256-acre property that covers approximately 2800 hectares. The
claims are the subject of Qualifying Reports dated May 1, 2006 and June 30, 2004
prepared by Edward Sawitzky, P. Geo. of Arc Metals Ltd. ("Arc"). Arc prepared
the report to standards dictated by National Instrument 43-101.
Following the recommendationsone kilometre of the May 2006 Qualifying Report - during the
summer of 2006 an exploration program was completed under PFG's direction.Mystery Offset
dike or MOD. The primary focus of the work plan wasMOD is interpreted to complete more detailed geological mapping
of the claims, stripping of over-burden and grab sampling. Approximately 30
man-days of field work were completed and more than seventy samples were
collected and delivered to TSL Laboratories in Saskatoon for assay and analysis.
Subsequent to the year-end the Company has received the detailed geologist's
maps, data and assay results. Review of these materials plus the detailed report
of the activities, findings and recommendations are under review by the Company.
The Company remains optimistic about the prospect for discovery of a definable
mineral resource on its claims in Manitoba. However, its exploration to date has
failed to immediately delineate the indicators required to step-up to a drilling
program. Further groundwork will be required to elevate the status of the claims
to drill-ready.
Subsequent to the end of the year the Company's directors resolved to change the
expiry date of the warrants outstanding. The warrants entitle the holder,
subject to certain conditions, to purchase one common share per warrant at a
price of $0.18 per share; the warrants will now expire on December 5, 2008 - an extension of six months. Priorthe Worthington Offset
dike which is a 10- to December 7, 200711-kilometre-long mineralized structure that extends from
the expiry datesouthwest margin of the warrantsSudbury igneous complex. The Company also has rights
to explore the Woods Creek and Halcyon properties in the Sudbury area; and has
an agreement to acquire 100% ownership to the high-grade Ni-Cu-PGE South Bay
property near Thompson and the large grassroots Thompson North and Cedar Lake
properties, which are part of the world-class Thompson Nickel Belt in Manitoba.
The Company entered into an agreement with an independent entity to sell Outback
Capital Inc., and its remaining interest in this property. This was extendeddone in
order to prepare for a further six months.the shift in focus from precious metals to base metals.
10
FLUCTUATIONS IN RESULTS
The Company's annual operating results fluctuate, but very little. Revenuesa little and revenues at this
point are solely derived from consulting activities which are not core to
the Company's focus and will fluctuate greatly based upon the Company's receipt
12
of infrequent, third-party referrals for these services. There is no revenue
from operations.generated. Expenses fluctuate on the basis of costs for
exploration and related activities, and the ever increasing administrative and
other costs of complying with the various regulatory requirements of a public
company. We expect that these regulatory related expenses will continue to
increase due to the upward pressure on professional fees charged to reporting
companies, resulting from changes to securities legislation throughout North
America.
With the PFG acquisitionApril 2010 entry into the arena of base metal exploration the Company
expects to report significant additional expenses in the future related to the
exploration activities undertaken in the Sudbury area of Ontario and the
Thompson Nickel Belt in Manitoba. Following the expected sale of Outback Capital
Inc., the Company will have no further expenses related to exploration in the
Bissett Manitoba.area.
B. LIQUIDITY AND CAPITAL RESOURCES
Since the Company is organized in Canada, the Company's December 31, 20072010
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles.
As at December 31, 2007,2010, the Company had accumulated losses totaling $13,463,364$14,311,794
and a working capital deficit of $37,161.$556,665. The continuation of the Company is dependent
upon the continued financial support of shareholders as well as obtaining
additional financing for the current and subsequent resource projects.
As noted, these conditions raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustment that might arise from uncertainty. The auditors' report includes an
explanatory paragraph disclosing the Company's ability to continue as a going
concern.
As at December 31, 20072010 the Company had cash of $69,628$659,227 and a working capital deficit of
$37,161.$556,665.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
Not applicable
D. TREND INFORMATION
Other thanThe major trends impacting the continuingcompany and its industry are lack of access to
capital, caused by the severe global financial contraction, and the
corresponding contraction of demand for variousmost commodities. Only precious metals
driven by the rapidly
growing economies of Chinaseem to have continuing and India, the only other trend that could be
expected to impact results is the scarcity of geologists in the area.possibly increasing demand.
IMPACT OF INFLATION
The Company believes that inflation had minimal effect on costs related to its
exploration activities in the 12 months ending December 31, 2007.2010.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to the Company.
11
E. OFF-BALANCE SHEET ARRANGEMENTS
Not applicable
13
F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Not applicable
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
It should be noted that the management discussed below is primarily involved
with the Company's current activities. As the Company concludes an acquisition
or merger, or embarks on any other type of project, additional personnel with
differing areas of expertise will be utilized. Directors are elected annually by
a majority vote of the shareholders and hold office until the next general
meeting of the shareholders. Officers are appointed by, and serve at the
discretion of, the board of directors. The names, place of residence, positions
within the Company and the principal occupations of the directors and senior
officers of the Company are set out below.
14
A. DIRECTORS AND SENIOR MANAGEMENT.
Name, Municipality of Principal Occupation and
Residence and Position Position During the
with the Corporation Age Past Five Years
-------------------- --- ---------------
Douglas E. Ford (1) 4447 Director since September 10, 1992;
West Vancouver, B.C. General Manager of Dockside Capital, a
Director private merchant banking and venture
capital firm, from 1986 to present.
Martin Schultz 64Richard J. Mark 60 CEO & Chairman of VMS Ventures Inc. from
North Vancouver, BC 2002 - present, CEO & Chairman of
Chairman & Chief Executive Harvest Gold Corporation from 2005 -
Officer present President & CEO of
Pancontinental Uranium Corp.(formerly
Centram Exploration Ltd.) from 2007 -
present.
John Roozendaal 42 President of VMS Ventures Inc. from 1996
Brandon, MB - present President of Harvest Gold
Director Corporation from 2005 - present
Mark Fedikow 57 President of Mount Morgan Resources Inc.
Winnipeg, MB year - present Director and Secretary since March 20,VP of
President & Director Exploration and Technical Services for
VMS Ventures Inc. 2008 - present
James Clucas 65 President of Search Minerals Inc. from
North Vancouver, B.C. 1990; Self employed corporate
Secretary and Director development advisor for over 10 years.
John Stanton 62 Director since November 15, 1990; Self
Queensburg, New York Director employed pharmacist
Edward Dolejsi 63 Director since March 20, 1990;
Delta, B.C. Vice-President and General ManagerBC June 2009 - present; Chairman of
Director andInternational Nickel Ventures Corp. from
August 2009 until March 2009; President
BRI& CEO of International Nickel Ventures
Corp. from February 2007 until July
19942007; President of International Nickel
Ventures Corp. from September 2003,
until April, 1999;
self-employed software consultant since
May, 1999.November 2005.
Edward D. Ford (1) 7275 Director since March 20, 1990; also has
Whistler, B.C. devoted a portion of his time to
DirectorChief Financial Officer investment activities and as President
& Director of Dockside Capital, a private merchant
banking and venture capital firm, for
more than the last five years; chartered
accountant for more than 2040 years.
-
----------
(1) Edward Ford is the father of Douglas Ford.
12
B. COMPENSATION.
Management compensation is determined by the board of directors based on
competitive prices for services provided. During the year ended December 31,
2007,2010, directors and officers, including private companies controlled by
directors and officers, as a group, were paid or accrued a total of $24,000$90,000 in
management fees, paid or accrued a total of $11,772 in professional fees, paid
or accrued a total of $19,000 in consulting fees and rent.paid or accrued a total of
$28,000 in geological consulting fees. See "Item 7. Major Shareholders and
Related Party Transactions" for more detail on fees paid to members of
management or to entities owned by them.
For the year ended December 31, 2007,2010, the Company paid no compensation to
Directors for acting as Directors. The Company does not have any pension or
retirement plans, nor does the Company compensate its directors and officers by
way of any material bonus or profit sharing plans. Directors, officers,
employees and other key personnel of the Company may be compensated by way of
stock options.
15
C. BOARD PRACTICES.
Pursuant to the provisions of the COMPANY ACT (BC), the Company's directors are
elected annually at the regularly schedules annual general meeting of
shareholders. Each elected director is elected for a one-year term unless he
resigns prior to the expiry of his term.
The Company has no arrangements in place for provision of benefits to its
directors or upon their termination.
The Board has one committee, the Audit Committee, made-up of Messrs. Edward
Ford, John StantonJames Clucas and Douglas Ford. The Audit Committee meets with the auditors
annually prior to completion of the audited financial statements and regularly
with management during the fiscal year. On May 2, 2006, the Company's board of
directors adopted a new charter for the Audit Committee.
D. EMPLOYEES.
Effective at December 31, 20072010 the Company had noa few salaried employees.
E. SHARE OWNERSHIP.
A total of ten percent (10%) of the common shares of the Company, outstanding
from time to time, are reserved for the issuance of stock options pursuant to
the Company's Incentive Stock Option Plan. NoneDuring the year 3,300,000 stock
options were allocated at December 31,
2007.granted to directors, consultants and employees. Other information
on ownership is contained in the table below.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
A. MAJOR SHAREHOLDERS.
The following table sets forth certain information regarding beneficial
ownership of the Company's shares at December 31, 20072010 by (i) each person who is
known to own beneficially more than 5% of the Company's outstanding Common
Stock, (ii) each of the Company's directors and executive officers and (iii) all
current directors and executive officers as a group. The table does not reflect
13
common shares held of record by depositories, but does include currently
exercisable options and warrants which are included in the calculation of
percentage of class ownership for each individual holder. As of December 31,
20072010 there were 10,883,45235,231,730 common shares issued and outstanding. Each of the
listed persons may be reached at the Company's head offices.
16
Name and Addressoffices or #208 - 828
Harbourside Drive, North Vancouver, BC, V7P 3R9, telephone (604) 904-8481.
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------------------------- -------------------- -----
PRINCIPAL HOLDERS
Not applicableVMS Ventures Inc. 16,800,000 47.7%
OFFICERS AND DIRECTORS
Edward Ford 4,493,000 (1)(2) 41.28
John Stanton 55,000 * 0.005342,000 1.00%
Douglas Ford 914,000 (3) 8.398
Martin Schultz 483,167 4.439
Edward Dolejsi 6,200 * 0.001242,000 n/a
Richard J. Mark 1,075,000 3.05%
John Roozendaal 450,000 (1) 1.28%
Mark Fedikow 1,000,000 (2) 2.84%
James Clucas 100,000 n/a
All Officers and Directors
as a Group (5 Persons) 5,951,367 54.68
-(6 persons) 3,209,000 9.11%
----------
* Less than one percent.
(1) AllIncludes 450,000 shares subject to Lock-up Agreement dated November 15, 2006, attached
as Exhibit 99.2 to the June 28, 2007 Form 20-F of the Company.held held through 667961 BC Ltd.
(2) Includes 1,483,000300,000 shares held directly; and 430,000700, ,000 shares held through
Singer Associates Holdings Ltd.;Mount Morgan Resources Ltd..
The Company arranged two non-brokered private placements of common shares. The
first consisted of 10,000,000 post-consolidation shares at $0.05. The second
consisted of 10,000,000 post-consolidation units at $0.06. Each unit consists of
one post consolidation share and 430,000 shares held through Arizona
Outdoor Specialists Inc.;one non-transferrable warrant to purchase an
additional post-consolidation common share at $0.10 for 30 months after closing.
The warrants may be subject to earlier expiry. The closings of the private
placements when combined with the share issuances required to complete the
acquisition of the Ontario and 430,000 shares held through BWN Oil
Technologies Inc.; and 430,000 shares held through Dockside Capital Group
Inc.; and 430,000 shares held through Good Times Enterprises Inc.; and
430,000 shares held through Specialty Holdings Inc.; and 430,000 shares
held through Wheels `n Gear Inc.
(3) Includes 430,000 shares held through Wink Holdings Ltd.Manitoba nickel properties will result in new
share positions being created that could have an influence on the direction of
the Company. The Company knows of no other arrangements which may at a
subsequent date result in a change in control of the Company.
B. RELATED PARTY TRANSACTIONS.
During the fiscal year ended December 31, 2007,2010, directors, officers and
companies controlled by them have been engaged in the following transactions
with the Company:
During the year ended December 31, 2007,2010, a director and a company in which a
director has an interest charged the Company $90,000 (2009: $24,000, (2006: $24,000, 2005:2008:
$24,000) for rent and management fees.
The unpaid portion of these amounts, plus additional advances
and other amounts due to directors, aggregating $87,280 (2006: $72,350, 2005:
$34,810) was included in accounts payable and accrued liabilities at December
31, 2007.
During the year ended December 31, 2004,2010, a company controlled byin which a director purchasedhas an
interest charged the Company's investment,Company $19,000 (2009: $Nil, 2008: $Nil) for consulting
fees.
During the year ended December 31, 2010, a 3%company in which a director has an
interest in a private company,charged the Company $11,772 (2009: $Nil, 2008: $Nil) for $30,000 resulting in a loss of $16,024. The $30,000 purchase price formed partprofessional
fees.
14
During the year ended December 31, 2010, directors of the Company and a company
in which a director has an interest charged the Company $90,000 (2009 - $24,000;
2008; $24,000).
During the year end accounts receivable.
The aboveended December 31, 2010, a director charged the Company $28,000
(2009: $Nil, 2008: $Nil) for consulting services. $26,833 (2009 - $Nil, 2008 -
$Nil) has been recorded in consulting services as deferred exploration costs for
mineral properties and $1,167 (2009 - $Nil, 2008 - $Nil) has been recorded in
consulting fees on the statements of operations.
During the year ended December 31, 2010, 2,640,000 common shares at a fair value
of $132,000 were issued to a company in which a director has an interest for
settlement of debt.
During the year ended December 31, 2010, the Company entered into a purchase and
sale agreement with directors in common for the Manitoba Nickel Properties.
Related party transactions were made on terms as favorable as or more favorablein the normal course of business and have been
recorded at the exchange amount which is the fair value agreed to between the
parties. Amounts due to related parties of $87,094 (2009 - $132,333) owing to
directors of the Company than those that could be obtained from unaffiliated third parties.
17
and companies in directors have an interest. Amounts
due to related parties are unsecured, non-interest bearing and without specific
terms of repayment.
C. INTERESTS OF EXPERTS AND COUNSEL
Not requiredrequired.
ITEM 8. FINANCIAL INFORMATION
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
See Item 17 and our consolidated financial statements and accompanying notes
beginning on page F-1F-1.
B. SIGNIFICANT CHANGES
The Company is not aware of any significant change since December 31, 20072010 that
is not otherwise reported in this filing.
ITEM 9. THE OFFER AND LISTING
Effective December 21, 2006 our common shares became quoted on the United States
OTC Bulletin Board, under the symbol "WSCRF". The table below sets forth certain
information regarding the price history of our common shares. Note this trading
data does not take into effect the 2-old for 1-new reverse split effected on
April 20, 2010.
Period High (USD) Low (USD)
------ ---------- ---------
Fiscal year ended December 31, 2006 $0.25 $0.102008 $0.16 $0.06
Fiscal year ended December 31, 2007 $0.30 $0.052009 $0.25 $0.02
Fiscal year ended December 31, 2010 $1.50 $0.02
Quarter ended December 31, 20062009 $0.25 $0.10$0.02
Quarter ended March 31, 2007 $0.302010 $0.05 $0.03
Quarter ended June 30, 2007 $0.20 $0.202010 $0.48 $0.06
Quarter ended September 30, 2007 $0.21 $0.192010 $1.50 $0.02
Quarter ended December 31, 2007 $0.17 $0.162010 $0.11 $0.02
Quarter ended March 31, 2008 $0.162011 $1.01 $0.09
15
Month ended October 31, 2010 $0.10 $0.10
Month ended November 30, 2010 $0.11 $0.11
Month ended December 31, 2007 $0.17 $0.162010 $0.11 $0.02
Month ended January 31, 2008 $0.162011 $1.01 $0.11
Month ended February 29, 2008 $0.11 $0.1128, 2011 $0.10 $0.10
Month ended March 31, 2008 $0.11 $0.102011 $0.12 $0.09
Month ended April 30, 2008 $0.11 $0.10
Month ended May 31, 2008 $0.11 $0.11
Month ended June 30, 20082011 (1) $0.11 $0.11
-$0.80 $0.35
----------
(1) Through June 23, 2008April 18, 2011
ITEM 10. ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not required
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
1. The companyCompany was incorporated as Rainbow Resources Ltd. September 20
1983 under certificate of incorporation no. 268952 in the Province of
British Columbia Canada. The name was changed to Widescope Resources
Ltd. May 1 1984, to Gemini Technology Inc. September 13 1985, to
International Gemini Technology Inc. September 23 1993, and to
Widescope Recources Inc., effective July 12, 2006. The name was
subsequemtly changed to North American Nickel Inc., effective April
19, 2010. No objects and purposes are described.
2. If a director has a material interest in a matter subject to a vote,
he must declare it and abstain from voting, or have his vote not
counted, except for certain specific exclusions which include setting
director compensation. There are no restrictions on directors issuing
debt however shareholder approval may be required in connection with
convertible debt or other debt driven requirements to issue shares.
There is no retirement age or share ownership requirement for
directors.
3. Dividends are declared by directors and subject to any special rights,
paid to all holders of shares in a class according to the number of
shares held. Voting rights are one vote per share. Directors stand for
election every year at the annual meeting. Shareholders have no rights
to share directly in the company's profits. Subject to prior claims of
creditors and preferred shareholders, common shareholders participate
in any surplus in the event of liquidation according to the number of
shares held. The companyCompany may redeem shares by directors' resolution in
compliance with applicable law unless the company is insolvent or may
become insolvent by doing so. It must make its offer pro rata to every
member who holds a class, subject to applicable stock exchange rules
or company act provisions. The directors have wide discretion.
Shareholders have no liability for further capital calls. No
discriminatory provisions, against an existing or prospective
shareholder of a substantial number of shares, are imposed by the
articles.
4. Rights of holders of any class of shares can only be changed with
their consent, and in accordance with the company act. Consent must be
in writing by the holders or by a three fourths majority of a vote of
the holders, and by the consent of the British Columbia Securities
Commission.
5. A notice convening an annual general or special meeting must specify
the place, date, hour, and in the case of a special meeting, the
general nature of the special business, and must be given in
accordance with the company act. There are no special conditions
outlining rights of admission.
16
6. There are no limitations on rights to own securities.
7. There are no provisions to delay, defer, or prevent a change in
control.
8. Nothing in the articles requires ownership disclosure.
19
9. Not applicable.
10. Not applicable.
C. MATERIAL CONTRACTS
The Company entered into a subscription agreement to invest $200,000 into
Outback Capital Inc. dba Pinefalls Gold (PFG) a private Alberta Company with
certain directors and principal shareholders in common with the Company. PFG is
an exploration company with mining claims located in the area of Bissett,
Manitoba. The Company will invest $200,000 in exchange for 4 million units at
$0.05 per unit, each unit comprised of one common share and one warrant to
purchase an additional common share at $0.075 for a period of two years. Prior
to exercising the warrants, after making the investment of $200,000 the Company
will own approximately 37% of the common shares of PFG. As at December 31, 2005,
the Company had invested $90,000 for 1.8 million units, approximately 17% of the
outstanding common shares of PFG.
In addition the Company entered into an option agreement with one of the
principal shareholders of PFG, a director of the Company, which entitles the
company to acquire a further 3 million common shares of PFG in exchange for one
million common shares of the Company. The option, exercisable at the Company's
discretion until March 31, 2007, was exercised.
Pursuant to the terms of the subscription agreement and the option agreement,
the latter having been exercised, the company owns 65.42% of the common shares
of PFG.
On April 6, 2009 the company entered into an option agreement with respect to
its 14 remaining claims in the Rice Lake area of Manitoba. The option provides
Cougar Minerals Corporation, a corporation traded on the Canadian National Stock
Exchange (CNSX) to acquire 100% of the company's interest in these claims, and
is open for exercise until April 6, 2009. The purchase price is $180,000 with
$35,000 paid as a non- refundable deposit. The deposit was paid as to $10,000
cash and 500,000 of Cougar's common shares at a deemed price of $0.05 per share.
The Company has entered into an agreement with an independent entity that will
result in it divesting of Outback Capital Inc.
On April 6, 2010 the Company announced that it had entered into four agreements
to acquire rights to the Post Creek, Bell Lake, Woods Creek and Halcyon
properties in the Sudbury, Ontario nickel belt; and one agreement to acquire up
to a 100% ownership of the high-grade Ni-Cu-PGE South Bay property near Thompson
and the large grassroots Thompson North and Cedar Lake properties, which are
part of the world-class Thompson Nickel Belt.
Effective May 1, 2010, the Company entered into the following agreements for
services with directors of the Company and a company in which a director has an
interest:
i) Management fees: $5,000 per month and $4,000 per month
ii) Consulting fees: $3,500 per month
Each of the agreements has the same terms and conditions which shall be
continous and may only be terminated by mutual agreement of the parties, subject
to the provisions that in the event there is a change of effective control of
the Company, the employee shall have the right to terminate the agreement,
17
within sixty days from the date of such change of effective control, upon
written notice to the Company. Within thirty days from the date of delivery of
such notice, the Company shall forward to the employee the amount of money due
and owing to the employee herunder to the extent accrued due to the employee to
the effective date of termination.
D. EXCHANGE CONTROLS
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD
NOT BE INTERPRETED AS, LEGAL ADVICE TO ANY PROSPECTIVE PURCHASER. ACCORDINGLY,
PROSPECTIVE PURCHASERS OF THE COMPANY'S SHARES SHOULD CONSULT WITH THEIR OWN
ADVISORS WITH RESPECT TO THEIR INDIVIDUAL CIRCUMSTANCES.
There are no laws or governmental decrees or regulations in Canada that restrict
the export or import of capital, or which affect the remittance of dividends,
interest or other payments to holders of the Company's securities who are not
residents of Canada, other than withholding tax requirements. Reference is made
to "Item 7. Taxation".
There are no limitations imposed by the laws of Canada, the laws of Alberta or
by the charter or other governing documents of the Company on the right of a
non-resident to hold or vote common shares of the Company, other than as
provided in the Investment Canada Act (the "Investment Act") and the potential
requirement for a Competition Act Review.
The following summarizes the principal features of the Investment Act and the
Competition Act Review for a non-resident who proposes to acquire common shares.
This summary is of a general nature only and is not intended to be, nor is it, a
substitute for independent advice from an investor's own advisor. This summary
does not anticipate statutory or regulatory amendments.
THE CANADIAN INVESTMENT ACT
The Canadian Investment Act generally prohibits implementation of a reviewable
investment by an individual, government or agency thereof, corporation,
partnership, trust or joint venture that is not a "Canadian" as defined in the
Investment Act (a "non-Canadian"), unless, after review, the minister
20
responsible for the Investment Act (the "Minister") is satisfied that the
investment is likely to be of a net benefit to Canada. Under the Investment Act,
a United States citizen qualifies as a "World Trade Organization Investor."
Subject to the restrictions noted below, an investment in a Canadian business by
a World Trade Organization Investor would be reviewable under the Investment Act
only if it is an investment to acquire control of such Canadian business and the
value of the assets of the Canadian business as shown on its financial
statements is not less than a specified amount, which for 1999 was $184 million.
An investment in the shares of a Canadian business by a non-Canadian other than
a "World Trade Organization Investor" when the Company is not controlled by a
World Trade Organization Investor, would be reviewable under the Investment Act
if it is an investment to acquire control of the Canadian business and the value
of the assets of the Canadian business as shown on its financial statements is
$5 million or more, or if an order for review is made by the federal cabinet on
the grounds that the investment relates to Canada's cultural heritage or
national identity.
The acquisition by a World Trade Organization Investor of control of a Canadian
business in any of the following sectors is also subject to review if the value
of the assets of the Canadian business exceeds $5 million (as shown on its
financial statements): uranium, financial services (except insurance),
transportation services and cultural businesses, which include broadcast media
(publication, distribution or sale of books, magazines, periodicals, newspapers,
music, film and video products and the exhibition of film and video products),
television and radio services. As the Company's business does not fall under any
18
of the aforementioned categories, the acquisition of control of the Company, in
excess of the $5 million threshold, by a World Trade Organization Investor would
not be subject to such review.
A non-Canadian would acquire control of the Company for purposes of the
Investment Act if the non-Canadian acquired a majority of the common shares.
The acquisition of less than a majority but one-third or more of the common
shares would be presumed to be an acquisition of control of the Company unless
it could be established that, on acquisition, the Company was not controlled in
fact by the acquirer through the ownership of common shares. Notwithstanding the
review provisions, any transaction involving the acquisition of control of a
Canadian business or the establishment of a new business in Canada by a
non-Canadian is a notifiable transaction and must be reported to Industry Canada
by the non-Canadian making the investment either before or within thirty days
after the investment.
Certain transactions relating to common shares are exempt from the Investment
Act, including:
* an acquisition of common shares by a person in the ordinary course of
that person's business as a trader or dealer in securities;
* an acquisition of control of the Company in connection with the
realization of security granted for a loan or other financial
assistance and not for a purpose related to the provisions of the
Investment Act; and
* an acquisition of control of the Company by reason of an amalgamation,
merger, consolidation or corporate reorganization, following which the
ultimate direct or indirect control in fact of the Company, through
the ownership of common shares, remained unchanged.
21
CANADIAN COMPETITION ACT REVIEW
Investments giving rise to the acquisition or establishment, directly or
indirectly, by one or more persons of control over, or a significant interest in
the whole or part of a business of a competitor, supplier, customer or other
person are subject to substantive review by Canada's Competition Law Authority,
the Director of Investigation and Research (the "Director"). If or when the
Director concludes that a merger, whether by purchase or lease of shares or
assets, by amalgamation or by combination, or otherwise, prevents or lessens, or
is likely to prevent or lessen competition substantially, he may apply as may be
necessary to eliminate the substantial lessening or prevention of competition.
Such substantive merger review power applies to all mergers, whether or not they
meet limits for pre-notification under the Competition Act.
In addition to substantive merger review, the Competition Act provides for a
pre-notification regime respecting mergers of a certain size. The regime applies
in respect of share acquisitions, asset acquisitions, amalgamations and
combinations. For ease of reference, this filing refers specifically to share
acquisition, although the pre-notification regime applies, with the appropriate
modification, to other types of acquisition of control as well.
In order for a share acquisition transaction to be pre-notifiable, the parties
to the transaction (being the person or persons who proposed to acquire shares,
and the corporation the shares of which are to be acquired), together with their
affiliates (being all firms with a 50% or more voting shares linkage up and down
the chain) must have:
(i) aggregate gross assets in Canada that exceed $400,000,000 in value, as
shown on their audited financial statements for the most recently
completed fiscal year (which must be within the last fifteen (15)
months); or
19
(ii) aggregate gross revenue from sales in, from or into Canada that exceed
$400,000,000 for the most recently completed fiscal year shown on the
said financial statements; and
(iii)the party being acquired or corporations controlled by that party
must have gross assets in Canada, or gross revenues from sales in or
from Canada, exceeding $35,000,000 as shown on the said financial
statements. Acquisition of shares carrying up to 20% of the votes of a
publicly-traded corporation, or 35% of the votes in a private
corporation, will not be subject to pre-notification, regardless of
the above thresholds. However, exceeding the 20% or the 35% threshold,
and again exceeding the 50% threshold, gives rise to an obligation of
notification if the size threshold is met.
If a transaction is pre-notifiable, a filing must be made with the Director
containing the prescribed information with respect to the parties, and a waiting
period (either seven or twenty-one days, depending on whether a long or short
form filing is chosen) must expire prior to closing.
As an alternative to pre-notification, the Director may grant an Advance Ruling
Certificate, which exempts the transaction from pre-notification. Advance Ruling
Certificates are granted where the Director concludes, based on the information
provided to him, that he would not have sufficient grounds on which to apply to
the Competition Tribunal to challenge the Merger.
E. TAXATION
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD
NOT BE INTERPRETED AS, LEGAL OR TAX ADVICE TO ANY PROSPECTIVE PURCHASER OR
HOLDER OF THE COMPANY'S SHARES AND NO REPRESENTATION WITH RESPECT TO THE
22
CANADIAN FEDERAL INCOME TAX CONSEQUENCES TO ANY SUCH PROSPECTIVE PURCHASER IS
MADE. ACCORDINGLY, PROSPECTIVE PURCHASERS OF THE COMPANY'S SHARES SHOULD CONSULT
WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR INDIVIDUAL CIRCUMSTANCES.
The following summary describes the principal Canadian federal income tax
considerations generally applicable to a holder of the Company's shares who, for
purposes of the Income Tax Act (Canada) (the "Canadian Tax Act") and the
Canada-United States Income Tax Convention, 1980 (the "Convention") and at all
relevant times is resident in the United States and not resident in Canada,
deals at arm's length with the Company, holds the Company's shares as capital
property, and does not use or hold and is not deemed to use or hold the
Company's shares in or in the course of carrying on business in Canada (a
"United States Holder").
This following summary is based upon the current provisions of the Canadian
Income Tax Act, the regulations thereunder, all specific proposals to amend the
Canadian Tax Act and the regulations announced by the Minister of Finance
(Canada) prior to the date hereof and the Company's understanding of the
published administrative practices of the Canada Customs and Revenue Agency
(formerly Revenue Canada, Customs, Excise and Taxation). This summary does not
take into account or anticipate any other changes in the governing law, whether
by judicial, governmental or legislative decision or action, nor does it take
into account the tax legislation or considerations of any province, territory or
non-Canadian jurisdiction (including the United States), which legislation or
considerations may differ significantly from those described herein.
DISPOSITION OF THE COMPANY'S SHARES
In general, a United States shareholder will not be subject to Canadian income
tax on capital gains arising on the disposition of the Company's shares, unless
such shares are "taxable Canadian property" within the meaning of the Canadian
Income Tax Act and no relief is afforded under any applicable tax treaty. The
20
shares of the Company would be taxable Canadian property of a non-resident if at
any time during the five-year period immediately preceding a disposition by the
non-resident of such shares, not less than 25% of the issued shares of any class
or series of all classes of shares of the Company belonged to the non-resident,
to persons with whom the non-resident did not deal at arm's length, or to the
non-resident and persons with whom the non-resident did not deal at arm's length
for purposes of the Canadian Income Tax Act. For this purpose, issued shares
include options to acquire such shares (including conversion rights) held by
such persons. Under the Convention, a capital gain realized by a resident of the
United States will not be subject to Canadian tax unless the value of the shares
of the Company is derived principally from real estate (as defined in the
Convention) situated in Canada.
F.G. DIVIDENDS AND PAYING AGENTS
Not required
G.H. STATEMENT BY EXPERTS
Not required
23
H.I. DOCUMENTS ON DISPLAY
All documents referenced in this Form 20-F may be viewed at the offices of the
Company during business hours #208#301 - 828 Harbourside Drive,260 West Esplanade, North Vancouver BC V7P 3R9V7M
3G7, Canada, Telephone 604-904-8481.
I.604-986-2020.
J. SUBSIDIARY INFORMATION
As of June 30, 2006 Outback Capital Inc. dba Pinefalls Gold ("PFG") a private
Alberta corporation become a majority-owned subsidiary of the Company. PFG was
incorporated under the Alberta BUSINESS CORPORATIONS ACT on February 6, 2001.
During the year ended December 31, 2010, the Company entered into an agreement
with an independent third party whereby this party acquired Outback Capital Inc.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not required
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
Not applicable
21
ITEM 15. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of management, including our
chief executive officer and the chief financial officer, we conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, as of December 31, 2007.2010. Based on this evaluation, our chief
executive officer and chief financial officer concluded as of December 31, 20072010
that our disclosure controls and procedures were effective.
24
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of consolidated financial statements in accordance
with generally accepted accounting principles and includes those policies and
procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of a company's assets,
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of consolidated financial statements in accordance with
generally accepted accounting principles, and that a company's receipts and
expenditures are being made only in accordance with authorizations of a
company's management and directors, and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of a company's assets that could
have a material effect on the consolidated financial statements.
Internal control over financial reporting is a process that involves human
diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also
can be circumvented by collusion or improper management override. Because of
such limitations, internal control over financial reporting cannot provide
absolute assurance of achieving financial reporting objectives. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies and procedures may
deteriorate.
However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk. Management is responsible
for establishing and maintaining adequate internal control over financial
reporting for the company.
Management has used the framework set forth in the report entitled Internal
Control--Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the
effectiveness of the Company's internal control over financial reporting. Based
on this assessment, management has concluded that our internal control over
financial reporting was effective as of December 31, 2007.2010.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
22
Our management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only our management's report in this annual report on Form 20-F.
25
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting that
occurred during the period covered by this annual report on Form 20-F that have
materially affected, or are reasonably likely to materially affect our internal
controls over financial reporting.
ITEM 16.
A. AUDIT COMMITTEE FINANCIAL EXPERT
The companyCompany has as its audit committee financial expert Mr. Edward D. Ford who
is a Canadian Chartered Accountant. He has held this professional qualification
since 1961. During his career Mr. Ford has been an associate, manager and
partner of several Canadian professional accounting firms that specialized in
audit/assurance, taxation, insolvency and independent business consulting.
Additionally he has served as a Chief Financial Officer of several public
companies.
B. CODE OF ETHICS
The Company has adopted a code of ethics applicable to its directors, principal
executive officer, principal financial officer, principal accounting procedures,
and persons performing similar functions. A copy of the Company's Code of Ethics
will be made available to anyone who requests it in writing from the Company's
head office.
C. PRINCIPAL ACCOUNTING FEES AND SERVICES
(A) AUDIT FEES
Dale Matheson Carr-Hilton LaBonte, Chartered Accountants ("DMCL") billed the
Corporation $14,500$20,000 - $25,000 (estimated) for audit fees in the year ended
December 31, 2010; $16,000 in 2009, $12,000 in 2008, $14,500 in 2007; $13,000 in
2006; $9,000 in 2005; and $6,200 in 2004. The former auditor, Charlton &
Company, Chartered Accountants billed $2,675 in 2004.
(B) AUDIT RELATED FEES
DMCL billed the Company $1,000$2,000 - $3,000 for audit related services in the year
ended December 31, 2010; $3,000 in 2009; $nil in 2008; $1,000 in 2007; $nil in
2006, $nil in 2005 and $nil in 2004. The former auditor, Charlton & Company,
Chartered Accountants billed $nil in 2004.
(C) TAX FEES
DMCL did not provide the Corporation with any professional services rendered for
tax compliance, tax advice and tax planning in the years ended December 31,
2010, 2009, 2008, 2007, 2006 2005 and 2004.2005. The former auditor, Charlton & Company,
Chartered Accountants billed $nil in 2004.
23
(D) ALL OTHER FEES
DMCL did not bill the Corporation for any other products and services in the
years ended December 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004. The former
auditor, Charlton & Company, Chartered Accountants billed $nil in 2004.
(E) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
To ensure continuing auditor objectivity and to safeguard the independence of
our auditors, our audit committee has determined a framework for the type and
authorization of non-audit services which our auditors may provide. The audit
committee has adopted policies for the pre-approval of specific services that
26
may be provided by our auditors. The dual objectives of these policies are to
ensure that we benefit in a cost effective manner from the cumulative knowledge
and experience of our auditors, while also ensuring that the auditors maintain
the necessary degree of independence and objectivity.
Our audit committee approved the engagement of Dale Matheson Carr-Hilton LaBonte
to render audit and non-audit services before they were engaged by us.
D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable
E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not Applicable
ITEM 17. FINANCIAL STATEMENTS
The financial statements and notes thereto as required by Item 17 are attached
hereto and found immediately after the text of this Registration Statement. The
auditors' report of Dale Matheson Carr-Hilton LaBonte LLP, independent
registered public accountants, on the audited consolidated financial statements
and notes thereto is included immediately preceding the audited consolidated
financial statements.
Independent Auditors' Report.
Consolidated balance sheets as at December 31, 20072010 and 2006.2009.
Consolidated statements of operations and comprehensive loss as at
December 31, 2010, 2009 and 2008.
Consolidated statements of deficit and accumulated other comprehensive
income for the years ended December 31, 2007, 20062010, 2009 and 2005.2008.
Consolidated statements of cash flows for the years ended December 31,
2007, 20062010, 2009, and 2005.2008.
Notes to the consolidated financial statements.
ITEM 18. FINANCIAL STATEMENTS
Not applicable. See "Item 17. Financial Statements" above.
24
ITEM 19. EXHIBITS
Attached hereto are the following exhibits:
12.1 Certification of PresidentChief Executive Officer pursuant to s.302 of the
Sarbanes-Oxley Act of 2002
12.2 Certification of DirectorChief Financial Officer pursuant to s.302 of the
Sarbanes-Oxley Act of 2002
13.1 Certification of PresidentChief Executive Officer pursuant to s.906 of the
Sarbanes-Oxley Act of 2002
13.2 Certification of DirectorChief Financial Officer pursuant to s.906 of the
Sarbanes-Oxley Act of 2002
27
19.1 Management Discussion and Analysis for the year ended December 31, 2010
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC
(formerly Widescope Resources Inc.)
Date: June 23, 2008April, 19 2011
By: /s/ Martin Schultz
---------------------------------Douglas E. Ford
---------------------------------------
Name: Martin SchultzDouglas E. Ford
Title: Secretary and Director
as duly authorized signatory
2825
[LETTERHEAD OF DALE MATHESON CARR-HILTON LABONTE LLP CHARTERED ACCOUNTANTS]
INDEPENDENT AUDITORS' REPORT
To the Shareholders of North American Nickel Inc.
(formerly Widescope Resources Inc.)
We have audited the consolidated balance sheets of North American Nickel Inc.
(formerly Widescope Resources Inc.) as at December 31, 20072010 and 20062009 and the
consolidated statements of operations shareholders' equityand comprehensive loss, deficit and
accumulated other comprehensive income and cash flows for the years ended
December 31, 20072010, 2009 and 2006. These2008, and a summary of significant accounting
policies and other explanatory information.
MANAGEMENT'S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with Canadian generally accepted
accounting principles, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that
are the responsibility of the company's
management.free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards and with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we comply with ethical requirements and plan and perform anthe audit to obtain
reasonable assurance about whether the consolidated financial statements are
free from material misstatement. We were not engaged to perform an audit of the
Company's internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditors' judgment, including the assessment of the risks
of material misstatement.misstatement of the consolidated financial statements, whether due
to fraud or error. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements. An audit
also includes assessingstatements,
evaluating the appropriateness of accounting principlespolicies used and significantthe
reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statement
presentation.statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, thesethe consolidated financial statements present fairly, in all
material respects, the financial position of the CompanyNorth American Nickel Inc.
(formerly Widescope Resources Inc.) as at December 31, 20072010 and 20062009, and the
results of its operations and its cash flows for the years ended December 31,
20072010, 2009 and 20062008 in accordance with Canadian generally accepted accounting
principles.
/s/ DMCL
Dale Matheson Carr-Hilton Labonte LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
April 8, 2008
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA
-UNITED STATES REPORTING DIFFERENCES
InEMPHASIS OF MATTER
Without qualifying our opinion, we draw attention to Note 1 in the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when theconsolidated
financial statements are affected by conditions and eventswhich indicates that the Company had incurred losses to
date. This condition, along with other matters as set forth in Note 1, indicates
the existence of a material uncertainty that may cast substantialsignificant doubt onabout
the Company's ability to continue as a going concern, such as those described in
Note 1 to the financial statements. Our report to the shareholders dated April
8, 2008 is expressed in accordance with Canadian reporting standards which do
not permit a reference to such events and conditions in the auditors' report
when these are adequately disclosed in the financial statements.
/s/ DMCL
Dale Matheson Carr-Hilton Labonteconcern.
"DMCL"
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED ACCOUNTANTSChartered Accountants
Vancouver, Canada
April 8, 200819, 2011
F-1
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
Consolidated Balance Sheets
- --------------------------------------------------------------------------------(formerly Widescope Resources Inc.)
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31,
2007 December 31, 2006
----------------- -----------------2010 2009
------------ ------------
ASSETS
Current
assets
Cash $ 69,628659,227 $ 105,50416,515
Marketable securities (Note 3) -- 62,500
Receivables 3,606 3,52426,965 4,197
------------ ------------
73,234 109,028
------------ ------------686,192 83,212
Mineral propertiesproperty and deferred exploration costs (Note 3) 343,955 333,158
Equipment, net of amortization (Note 3) 1,105 1,5794) 677,718 101,000
------------ ------------
$ 418,2941,363,910 $ 443,765184,212
============ ============
LIABILITIES
AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 110,39542,433 $ 77,42653,414
Due to related parties (Note 6) 87,094 132,333
------------ ------------
129,527 185,747
------------ ------------
Non-controlling interest (Note 3) 68,586 77,2674) -- 53,249
------------ ------------
Shareholders' equitySHAREHOLDERS' EQUITY
Share capital - preferred (Note 5)7) 604,724 604,724
Share capital - common (Note 5) 13,044,6097) 14,705,609 13,044,609
Contributed surplus (Note 5) 53,3447) 235,844 53,344
Deficit (13,463,364) (13,413,605)(14,311,794) (13,781,986)
Accumulated other comprehensive income -- 24,525
------------ ------------
239,313 289,0721,234,383 (54,784)
------------ ------------
$ 418,2941,363,910 $ 443,765184,212
============ ============
Nature and continuance of operations (Note 1)
Commitments (Note 12)
Subsequent events (Note 14)
Approved by the Board:
"Martin Schultz"
- -------------------------------------
Martin Schultz
"Douglas E."Rick Mark" "Edward D. Ford"
- -------------------------------------
Douglas E.------------------------------ ------------------------------
Rick Mark Edward D. Ford
The accompanying notes are an integral part of
these consolidated financial statements.
F-2
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
Consolidated Statements of Operations, Comprehensive loss, and Deficit
- --------------------------------------------------------------------------------(formerly Widescope Resources Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Years Ended December 31,
2007 2006 20052010 2009 2008
------------ ------------ ------------
Revenue
Interest income
EXPENSES
Consulting (Note 6) $ 25,556 $ -- $ 689 $ --
Filing fees 40,856 7,981 3,211
Investor relations 23,101 -- --
General and administrative 18,294 2,983 2,461
Management fessfees (Note 4)6) 90,000 24,000 24,000
Professional fees (Note 6) 132,730 22,671 34,466
Salaries 22,115 -- 9,000--
Stock-based compensation (Note 7) 182,500 -- --
------------ ------------ ------------
LOSS BEFORE OTHER ITEMS (535,152) (57,635) (64,138)
OTHER ITEMS
Loss on sale of subsidiary (Note 4) (7,163) -- 9,689--
Gain on sale of marketable securities (Note 3) 3,854 -- --
Impairment of mineral property and deferred
exploration costs (Note 4) -- (79,000) (145,445)
Write-off of equipment (Note 5) -- (716) --
------------ ------------ ------------
Expenses
General and administrative 58,440 51,311 54,804LOSS BEFORE NON-CONTROLLING INTEREST (538,461) (137,351) (209,583)
NON-CONTROLLING INTEREST IN LOSS 8,653 19,706 8,606
------------ ------------ ------------
Loss from operations (58,440) (41,622) (54,804)
Non-controlling interest (Note 3) 8,681 4,475 --
------------ ------------ ------------
Net loss and Comprehensive loss (49,759) (37,147) (54,804)
Deficit, beginning of year (13,413,605) (13,376,458) (13,321,654)
------------ ------------ ------------
Deficit, end of year $(13,463,364)NET LOSS FOR THE YEAR $ 13,413,605 $(13,376,458)(529,808) $ (117,645) $ (200,977)
============ ============ ============
EarningsLoss per common share - basic and diluted $ (0.01)(0.03) $ --(0.02) $ --(0.04)
============ ============ ============
Weighted average number of common shares
outstanding 10,883,452 10,383,452 9,084,049- basic and diluted
19,941,566 5,441,730 5,441,730
============ ============ ============
COMPREHENSIVE LOSS
Net loss $ (529,808) $ (117,645) $ (200,977)
Unrealized gain on marketable securities -- 24,525 --
------------ ------------ ------------
$ (529,808) $ (93,120) $ (200,977)
============ ============ ============
The accompanying notes are an integral part of
these consolidated financial statements.
F-3
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
Consolidated Statements of Cash Flow
- --------------------------------------------------------------------------------(formerly Widescope Resources Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOME
Years Endedended December 31,
2007 2006 2005
--------- --------- ---------2010 2009 2008
------------ ------------ ------------
OPERATING ACTIVITIES
Net loss $ (49,759) $ (37,147) $ (54,804)
Non cash Items:
Non-controlling interest in loss (8,681) (4,475) --
Amortization 474 -- --
Net change in working capital items:
Receivables (82) (3,920) 22,086
Accounts payable and accrued liabilities 32,969 20,664 (14,678)
--------- --------- ---------
Cash used in operations (25,079) (24,878) (47,396)
--------- --------- ---------
INVESTING ACTIVITIES
Cash acquired on acquisition of PFG, net of
amounts invested -- 16,108 (90,000)
Mineral property development costs (10,797) (13,852) --
BWN sale proceeds -- -- 30,000
--------- --------- ---------
Cash (used in) provided by investing activities (10,797) 2,256 (60,000)
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from sale of common shares -- -- 234,050
--------- --------- ---------
Cash from financing activities -- -- 234,050
--------- --------- ---------
Net increase (decrease) in cash (35,876) (22,622) 126,654
Cash,DEFICIT
Deficit, beginning of year 105,504 128,126 1,472
--------- --------- ---------
Cash, end$(13,781,986) $ 13,664,341) $(13,463,364)
Net loss (529,808) (117,645) (200,977)
------------ ------------ ------------
DEFICIT, END OF YEAR $(14,311,794) $(13,781,986) $(13,664,341)
============ ============ ============
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of year $ 69,628 $ 105,504 $ 128,126
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest24,525 $ -- $ --
$Unrealized gain/(loss) on available for sale
marketable securities (21,909) 24,525 --
========= ========= =========
Cash paid forReversal of accumulated other comprehensive income
taxesupon sale of subsidiary (Note 4) (2,616) -- --
------------ ------------ ------------
BALANCE, END OF YEAR $ -- $ --24,525 $ --
========= ========= ===================== ============ ============
The accompanying notes are an integral part of
these consolidated financial statements.
F-4
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
2010 2009 2008
----------- ----------- -----------
OPERATING ACTIVITIES
Net loss for the year $ (529,808) $ (117,645) $ (200,977)
Items not affecting cash
Non-controlling interest (8,653) (19,706) (8,606)
Amortization -- 58 331
Stock-based compensation 182,500 -- --
Loss on sale of subsidiary 7,163 -- --
Gain on sale of marketable securities (3,854) -- --
Write-off of equipment -- 716 --
Impairment of mineral properties and deferred
exploration costs -- 79,000 145,445
----------- ----------- -----------
(352,652) (57,577) (63,807)
Changes in non-cash working capital items:
Receivables (27,362) 680 (1,271)
Accounts payable and accrued liabilities 10,398 7,685 11,224
Due to related parties 86,761 25,066 31,377
----------- ----------- -----------
Cash used in operating activities (282,855) (24,146) (22,477)
----------- ----------- -----------
INVESTING ACTIVITIES
Proceeds from the sale of subsidiary 52,606 -- --
Proceeds from the sale of marketable securities 8,854 -- --
Expenditures on mineral properties and deferred
exploration costs (235,893) -- (6,490)
----------- ----------- -----------
Cash used in investing activities (174,433) -- (6,490)
----------- ----------- -----------
FINANCING ACTIVITIES
Proceeds on issuance of common shares 1,100,000 -- --
----------- ----------- -----------
Cash from financing activities 1,100,000 -- --
----------- ----------- -----------
CHANGE IN CASH 642,712 (24,146) (28,967)
CASH - beginning 16,515 40,661 69,628
----------- ----------- -----------
CASH - ending $ 659,227 $ 16,515 $ 40,661
=========== =========== ===========
Cash paid for:
Interest $ -- $ -- $ --
=========== =========== ===========
Income taxes $ -- $ -- $ --
=========== =========== ===========
Supplemental cash-flow information (Note 11)
The accompanying notes are integral part of
these consolidated financial statements.
F-5
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
(An Exploration Stage Company)
CONSOLIDATED SCHEDULE OF MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS
Pinefalls Post Woods Bell Thompson South
Gold Creek Creek Halcyon Lake North Bay Cedar Total
-------- -------- -------- -------- -------- -------- -------- -------- --------
Balance, December 31, 2008 $205,000 $ -- $ -- $ -- $ -- $ -- $ -- $ -- $205,000
-------- -------- -------- -------- -------- -------- -------- -------- --------
Acquisition costs-cash -- 7,500 2,500 -- -- -- -- -- 10,000
Option proceeds received (35,000) -- -- -- -- -- -- -- (35,000)
-------- -------- -------- -------- -------- -------- -------- -------- --------
170,000 7,500 2,500 -- -- -- -- -- 180,000
Impairment provision (79,000) -- -- -- -- -- -- -- (79,000)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Balance, December 31, 2009 91,000 7,500 2,500 -- -- -- -- -- 101,000
-------- -------- -------- -------- -------- -------- -------- -------- --------
Acquisition costs-cash -- 12,500 7,500 15,000 25,000 333 333 334 61,000
Acquisition cost-shares -- 24,000 9,000 18,000 18,000 120,000 120,000 120,000 429,000
Option proceeds received (25,000) -- -- -- -- -- -- -- (25,000)
-------- -------- -------- -------- -------- -------- -------- --------
(25,000) 36,500 16,500 33,000 43,000 120,333 120,333 120,334 465,000
-------- -------- -------- -------- -------- -------- -------- -------- --------
Administration -- 12,140 -- -- -- -- -- -- 12,140
Assay and sampling -- 5,140 -- -- -- -- 1,498 -- 6,638
Automobile costs -- 7,597 1,343 -- -- -- 185 -- 9,125
Consulting services (Note 6) -- 102,267 9,956 -- 150 585 840 400 114,198
Equipment and supplies -- 165 201 -- -- -- -- -- 366
Equipment rental -- 20,020 8,840 -- -- -- -- -- 28,860
Licenses and fees -- -- -- -- 410 -- -- -- 410
Shipping and printing costs -- 2,611 -- -- -- -- -- -- 2,611
Travel and accommodation -- 3,370 -- -- -- -- -- -- 3,370
-------- -------- -------- -------- -------- -------- -------- -------- --------
-- 153,310 20,340 -- 560 585 2,523 400
177,718
Sale of subsidiary (Note 4) (66,000) -- -- -- -- -- -- -- (66,000)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Balance, December 31, 2010 $ -- $197,310 $ 39,340 $ 33,000 $ 43,560 $120,918 $122,856 $120,734 $677,718
======== ======== ======== ======== ======== ======== ======== ======== ========
The accompanying notes are integral part of
these consolidated financial statements.
F-6
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
DECEMBERFor the Year Ended December 31, 2007
-2010
--------------------------------------------------------------------------------
1. NATURE AND CONTINUANCE OF OPERATIONS
North American Nickel Inc. (formerly Widescope Resources Inc.) (the "Company")
was incorporated on September 23, 1983.
The Company's principal business activities includeactivity is the exploration and development of
natural resource properties.mineral properties in Canada. The Company has acquired, directlynot yet determined whether these
properties contain ore reserves that are economically recoverable. The
recoverability of amounts shown for mineral property costs is dependent upon a
number of factors including environmental risk, legal and by waypolitical risk, the
existence of economically recoverable mineral reserves, confirmation of the
acquisitionCompany's interests in the underlying mineral claims, the ability of the Company
to obtain necessary financing to complete exploration and development, and to
attain sufficient net cash flow from future profitable production or disposition
proceeds.
On April 7, 2010, and effective May 31, 2010, the Company entered into a Stock
Purchase Agreement (the "Purchase Agreement") whereby it agreed to sell its
65.42% interest in Outback Capital Inc. dba Pinefalls Gold ("PFG") (Note 3)4), interests in various
mineral claims in Manitoba providing the right to explore. The Company had a
working capital deficit of $37,161 at December 31, 2007 and has incurred
substantial losses to date. The Company will require additional funding to
meet its obligations and the costs of its operations.
Effective July 12, 2006,private Alberta exploration company. On April 19, 2010, the Company changed its
name from International
Gemini Technology Inc. to Widescope Resources Inc. The Company's futureto North American Nickel Inc., consolidated
its common share capital requirements will depend on many factors,
including costsa 2:1 basis, whereby each two old shares were
exchanged for one new share, and increased its authorized capital from
100,000,000 common shares without par value to an unlimited number of explorationcommon
shares without par value (Note 7). All references to common shares, stock
options, warrants and developmentweighted average number of shares outstanding in these
consolidated financial statements retroactively reflect the properties, production,
if warranted, and competition and global market conditions. The Company's
potential recurring operating losses and growing working capital needs may
require that it obtain additional capital to operate its business. Such
outside capital will include the sale of additional common shares. There can
be no assurance that capital will be available as necessary to meet these
continuing exploration and development costs or, if the capital is available,
that it will be on terms acceptable to the Company. The issuances of
additional equity securities by the Company may result in a significant
dilution in the equity interests of its current shareholders.
The Company is dependent upon the discovery of economically recoverable
reserves, to obtain necessary financing to complete the development of its
properties, and future production or proceeds from the disposition thereof.
Theshare consolidation.
These consolidated financial statements have been prepared under the assumption
the Company is a going concern. The ability of the Company to continue
operations as a going concern is ultimately dependent upon attainingachieving profitable
operations. To date, the Company has not generated profitable operations from
its resource operationsactivities and will need to invest additional funds in carrying out
its planned exploration, development and operational activities. As a result,
moreadditional losses are anticipated prioranticipated. The Company has working capital of $556,665
at December 31, 2010 and has accumulated a deficit of $14,311,794. These
financial statements do not include any adjustments relating to obtainingthe
recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue
as a level of profitable
operations.going concern.
The properties in which the Company currently has an interest are in the
exploration stage. As such, the Company is dependent on external financing to
fund its activities. In order to carry out the planned exploration and cover
administrative costs, the Company will use its existing working capital and
raise additional amounts as needed. The Company will continue to assess new
properties and seek to acquire interests in additional properties if there is
sufficient geologic or economic potential and if adequate financial resources
are available to do so.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATIONBasis of presentation
These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"). Except as indicated
in Note 13, they also comply, in all material respects, with United States
generally accepted accounting principles ("US GAAP").
Basis of consolidation
These financial statements have been prepared on a consolidated basis and
include the accounts of the Company and the total operating activities of its
65.42% owned subsidiary, Outback
Capital Inc. effective June 30, 2006 (date of acquisition)PFG, up to May 31, 2010, when PFG was sold (Note 4).
All intercompany balances and transactions have been eliminated on
consolidation.
MINERAL PROPERTIESEstimates, assumptions and measurement uncertainty
The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the reported
F-7
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
2. SIGINIFICANT ACCOUNTING POLICIES - cont'd
Estimates, assumptions and measurement uncertainty - cont'd
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ from those
estimates. By their nature, these estimates are subject to measurement
uncertainty and the effect on the financial statements of changes in such
estimates in future periods could be significant. Areas requiring significant
use of estimates by management relate to going concern assessments, determining
the carrying value and or impairment of mineral properties, determining the fair
values of marketable securities and stock-based payments, asset retirement
obligations, financial instruments and tax rates used to calculate future income
tax balances.
Equipment
Equipment is recorded at cost. Amortization is calculated using the following
annual rate, which is estimated to match the useful lives of the asset:
Computer hardware 30% declining balance
Mineral properties and deferred exploration costs
The cost of mineral properties and related exploration and development costs are deferred until
the properties are placed into production, sold, abandoned or until management
has determined there to bethat an impairment. Theseimpairment has occurred. Carrying costs will be amortized
over the useful life of the properties following the commencement of commercial
production, or written off if the properties are sold abandoned, allowed to
lapse, or abandoned.if management has otherwise determined that the carrying value of a
property is not recoverable and should be impaired. Properties acquired under
option agreements, whereby payments are made at the sole discretion of the
Company, are recorded in the accounts at such time as the payments are made. It
is reasonably possible that economically recoverable reserves may not be
discovered, and accordingly a material portion of the carrying value of mineral
properties and related deferred exploration costs could be written off. Although
the Company has taken steps to verify title to mineral properties in which it
has an interest, according to the usualcommon industry standards for the stage of
exploration of such properties, these procedures do not guarantee the Company's
title. Such properties may be subject to prior agreements or transfers and title
may be affected by undetected title defects.
F-5
WIDESCOPE RESOURCES INC.
Notes to the Consolidated Financial Statements
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES CONT'D
ESTIMATES, ASSUMPTIONS AND MEASUREMENT UNCERTAINTY
The preparation of financial statements in conformity with Canadian generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
period. Actual results could differ from those estimates. By their nature,
these estimates are subject to measurement uncertainty and the effect on the
financial statements of changes in such estimates in future periods could be
significant. Areas requiring significant use of estimates by management
relate to determining the carrying value ofshown for mineral properties and tax ratesdeferred exploration costs
represent costs incurred to calculatedate, net of impairments, and do not necessarily
represent present or future income taxes.
FINANCIAL INSTRUMENTS
Effective January 1, 2007,values which are entirely dependent upon economic
production or recovery from disposal.
Asset retirement obligations
The Company follows the Company adoptedprovisions of the Canadian Institute of Chartered
Accountants (CICA)("CICA") Handbook Sections 3855, and 3861 financial
instruments; Section 1530, comprehensive income and Section 3865, hedges.
Section 3855 prescribes when a financial instrument is3110, "Asset Retirement Obligations",
which requires the estimated fair value of any asset retirement obligations to
be recognized onas a liability in the balance sheetperiod in which the related environmental or
retirement liability can be reasonably established and at what amount. Under Section 3855, financial
instruments must be classified into one of five categories: held-for-trading,
held-to-maturity, loans and receivables, available-for-sale financial assets,
or other financial liabilities. All financial instruments, including
derivatives, are measured at the balance sheet date at fair value except for
loans and receivables, held-to-maturity investments, and other financial
liabilities which are measured at amortized cost.
These standards have been applied prospectively.measured. The adoption of these
standards has not resulted in any adjustments to the carrying amounts of
financial assets and financial liabilities at January 1, 2007.
The Company does not have any items that would cause comprehensive loss to be
different than net loss of the year ended December 31, 2007.
The Company's financial instruments consist of cash, receivables, and
accounts payable and accrued liabilities. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. The fair
value of these financial instruments approximates their carrying values,
unless otherwise noted.
The Company has determined that it does not have derivatives or embedded
derivatives.
EQUIPMENT
Equipment is recorded at cost. Amortization is calculated using the following
annual rate, which is estimated to match the useful lives of the asset:
Computer hardware 30% declining balance
Equipment used in exploration activities, where substantially all the
economic life orpresent
value of the assetassociated future costs when measureable is expected to be derived from a specific
project, is accounted for as dedicated assets and includedrecorded as a separate
category within the costs allocatedliability
and added to the cost of the related exploration stage mineral
interests. Amortization for dedicated assets are providedproperty and amortized over the estimated
lives based on utilizationremaining life. As of December 31, 2010 and 2009 the Company has not incurred
and is recorded as deferrednot aware of any significant asset retirement obligations in respect of
its mineral exploration costsproperties.
Impairment of the related project.
F-6
WIDESCOPE RESOURCES INC.
Notes to the Consolidated Financial Statements
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES CONT'D
LOSS PER SHARE
The loss per share figures are calculated using the weighted average number
of shares outstanding during the respective fiscal years. The calculation of
loss per share figures using the Treasury Stock Method considers the
potential exercise of outstanding share purchase options and warrants or
other contingent issuances to the extent each option, warrant or contingent
issuance was dilutive. For the years presented, diluted loss per share is
equal to basic loss per share as the conversions are anti-dilutive.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments with a maturity of three
months or less at the time of issuance to be cash equivalents.
IMPAIRMENT OF LONG-LIVED ASSETSlong-lived assets
The Company follows the recommendations of the CICA Handbook Section 3063,
"Impairment of Long-Lived Assets". Section 3063 establishes standards for
recognizing, measuring and disclosing impairment of long-lived assets held for
use. The Company conducts its impairment test on long-lived assets when events
or changes in circumstances indicate that the carrying amount may not be
recoverable. Impairment is recognized when the carrying amount of an asset to be
held and used exceeds the undiscounted future net cash flows expected from its
use and disposal. If there is impairment, the impairment amount is measured as
the amount by which the carrying amount of the asset exceeds its fair value,
calculated using expected discounted cash flows when independent or quoted
market prices are not available.
INCOME TAXESF-8
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
2. SIGINIFICANT ACCOUNTING POLICIES - cont'd
Financial instruments
The Company adopted the CICA Handbook Section 3855, "Financial Instruments -
Recognition and Measurement". Section 3855 prescribes when a financial
instrument is to be recognized on the balance sheet and at what amount. Under
Section 3855, financial instruments must be classified into one of five
categories: held-for-trading, held-to-maturity, loans and receivables,
available-for-sale financial assets, or other financial liabilities. All
financial instruments, including derivatives, are measured at the balance sheet
date at fair value except for loans and receivables, held-to-maturity
investments, and other financial liabilities which are measured at amortized
cost.
The Company's financial instruments consist of cash, receivables, marketable
securities, accounts payable and due to related parties. Unless otherwise noted,
it is management's opinion that the Company is not exposed to significant
interest, currency, or credit risks arising from these financial instruments.
The Company has made the following classifications for the financial
instruments:
Cash - held-for-trading; measured at fair value;
Receivables - loans and receivables; measured at amortized cost;
Marketable securities - available for sale; measured at fair value; and
Accounts payable and due to related parties - other financial liabilities;
recorded at amortized cost.
Fair value estimates are made at the balance sheet date, based on relevant
market information and other information about financial instruments, and
approximate carrying values unless otherwise noted. The Company does not use any
hedging instruments.
The Company considers net smelter return ("NSR") and other production related
commitments associated with mineral property interests to be derivate
instruments. Until such time as economically recoverable resources are
identified such derivates are not considered to have reliably measurable value.
The Company adopted CICA Handbook Section 3862 "Financial Instruments -
Disclosures" which was amended to include additional disclosure requirements
about fair value measurements of financial instruments and to enhance liquidity
risk disclosure. The additional fair value measurement disclosures include
classification of financial inputs used in making the measurements, described as
follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets and
liabilities;
Level 2 - Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3 - Inputs derived from valuation techniques that include inputs from
management or other sources for the asset or liability that are not based on
observable market data (unobservable inputs).
Comprehensive income (loss)
Effective January 1, 2007, the Company adopted the CICA Handbook Section 1530,
"Comprehensive Income". Comprehensive income (loss) is defined as the change in
equity from transactions and other events from non-owner sources. Section 1530
establishes standards for reporting and presenting certain gains and losses not
normally included in net income or loss, such as unrealized gains and losses
related to available for sale securities and gains and losses resulting from the
translation of self-sustaining foreign operations, in a statement of
comprehensive income (loss).
At December 31, 2009, the Company recognized in comprehensive income its
proportionate share of an unrealized gain on marketable securities. In 2010, the
amount was reversed through operations when the securities were sold and the
gain was realized.
F-9
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
2. SIGINIFICANT ACCOUNTING POLICIES - cont'd
Loss per share
The loss per share figures are calculated using the weighted average number of
shares outstanding during the respective fiscal periods on a post-consolidation
basis. The calculation of loss per share figures using the treasury stock method
considers the potential exercise of outstanding share purchase options and
warrants or other contingent issuances to the extent each option, warrant or
contingent issuance was dilutive. For all periods presented, diluted loss per
share is equal to basic loss per share as the potential effects of options,
warrants and conversions are anti-dilutive.
Income taxes
The Company accounts for income taxes using the asset and liability method,
whereby future tax assets and liabilities are recognized for the future income
tax consequences attributable to differences between the carrying values of the
asset and liabilities and their respective income tax bases. Future income tax
assets and liabilities are measured using substantively enacted income tax rates
expected to apply to taxable income in the years in which temporary differences
are expected to be recovered or settled. The effect on future income taxes and
liabilities of a change in rates, when a valuation allowance has not been
applied, is included in operations in the period that includes the substantive
enactment date. Where the probability of a realization of a future income tax
asset is more likely than not, a valuation allowance is recorded.
STOCK-BASED COMPENSATIONStock-based compensation
The Company appliesfollows the CICA Handbook Section 3870, "Stock-based Compensation
and Other Stock-based Payments," which requires the fair value method of valuing
all grants of stock options. AllThe estimated fair value of the stock options granted are accounted foris
recorded as a capital transactioncompensation expense over the vesting period or at the timedate of grant
if the grantoptions vest immediately, with the related fair values being reflected asoffset recorded in contributed
surplus in shareholders' equity.surplus. The fair value of options granted is estimated at the date of grant
using the Black-Scholes option pricing model incorporating assumptions regarding
risk-free interest rates, dividend yield, volatility factor of the expected
market price of the Company's stock, and a weighted average expected life of the
options. The
estimated fair value of the options is recorded over the options' vesting
period. Any consideration paid on the exercise of stock options is credited to
share capital.
NEW ACCOUNTING PRONOUNCEMENTS
GOING-CONCERNcapital, together with a reversal of corresponding amounts originally
credited to contributed surplus.
Credit risk and the fair value of financial assets and financial liabilities
In June 2007,January 2009, the CICA amended Handbook Section 1400, "General Standardsapproved EIC 173, "Credit Risk and the Fair Value of
Financial Statement Presentation", which requires management to makeAssets and Liabilities". This guidance clarified that an assessment of Company's ability to continue as a going-concern. When
financial statements are not prepared on a going-concern basis, that fact
shall be disclosed together with the basis on which the financial statements
are preparedentity's own
credit risk and the reason whycredit risk of the Company is not considered a
going-concern.counterparty should be taken into account
in determining the fair value of financial assets and financial liabilities
including derivative instruments.
Mining exploration costs
In March 2009 the CICA approved EIC 174, "Mining Exploration Costs". The
new section is effective for years beginning on or after
January 1, 2008. The Company isguidance clarified that an enterprise that has initially capitalized exploration
costs has an obligation in the process of assessing the impact of
this new section oncurrent and subsequent accounting periods to test
such costs for recoverability whenever events or changes in circumstances
indicate that its consolidated financial statements.
F-7
WIDESCOPE RESOURCES INC.
Notes to the Consolidatedcarrying amount may not be recoverable.
Recent accounting pronouncements - Not yet adopted
International Financial Statements
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES CONT'D
NEW ACCOUNTING PRONOUNCEMENTS CONT'D
INTERNATIONAL FINANCIAL REPORTING STANDARDSReporting Standards ("IFRS")
In 2006,February 2008, the Canadian Accounting Standards Board confirmed that
publicly accountable enterprises will be required to adopt International
Financial Reporting Standards ("AcSB"IFRS") published a new
strategic plan that will significantly affect financial reporting
requirements for Canadian companies. The AcSB strategic plan outlines the
convergencein place of Canadian generally accepted accounting principles with IFRS
over an expected five year transitional period. In February 2008, the AcSB
announced that 2011 is the changeover date for publicly-listed companies to
use IFRS, replacing Canada's own generally accepted accounting principles.
The date isGAAP for interim and
annual financial statements relating toreporting purposes for fiscal years beginning on or after January 1,
2011. The transition date of January
1, 2011 will require the restatement for comparative purposes of amounts
reported byAccordingly, the Company will transition from current Canadian GAAP
reporting and commence reporting under IFRS for the year ended December 31, 2010. While the
Company has begun assessing the adoptionfirst quarter of IFRS for 2011, the financial
reporting impactwith
restatement of the transition to IFRS cannot be reasonably estimated at
this time.
CAPITAL DISCLOSURES
In December 2006, the CICA issued Section 1535 which specifies the disclosure
ofcomparative information that enables users of an entity's financial statements to
evaluate its objectives, policies and processes for managing capital, summary
quantitative data about what the entity manages as capital, whether it has
complied with any capital requirements and, if it has not complied, the
consequences on non-compliance. The mandatory effective date is for annual
and interim financial statements for years beginning on or after October 1,
2007. This new requirement must be adopted by the Company effective January
1, 2008.
FINANCIAL INSTRUMENTS DISCLOSURES AND FINANCIAL INSTRUMENTS PRESENTATION
Sections 3862 and 3863 will replace Section 3861, Financial Instruments
Disclosure and Presentation, revising and enhancing disclosure requirements
while carrying forward its presentation requirements. These new Sections will
place increased emphasis on disclosure about the nature and extent of risk
arising from financial instruments and how the entity manages those risks.
The mandatory effective date is for annual and interim financial statements
for years beginning on or after October 1, 2007.presented.
The Company will begin
applicationdeveloped a conversion plan consisting of these sections effective January 1, 2008. It is not
anticipated that the adoption of these new accounting standards will impact
the amounts reported in the Company's financial statements as they related
primarily to disclosure.
F-8four key stages including;
project planning and preliminary assessment, detailed assessment, design and
F-10
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
DECEMBERFor the Year Ended December 31, 20072010
--------------------------------------------------------------------------------
2. SIGINIFICANT ACCOUNTING POLICIES - --------------------------------------------------------------------------------cont'd
International Financial Reporting Standards ("IFRS") - cont'd
implementation. The project planning and preliminary assessment stage has been
completed. The preliminary assessment was completed with the assistance of
external advisors and training and outlines the significant differences between
Canadian GAAP and IFRS and rates the impact of each of the significant
differences on the entity's financial statements, thereby allowing the Company
to focus the detailed assessment on the highest priority items.
Consolidated Financial Statements, Business Combinations and Non-controlling
Interests
In January 2009, the CICA issued Section 1601, "Consolidated Financial
Statements", and Section 1602, "Noncontrolling Interests", which together
replace the existing Section 1600, "Consolidated Financial Statements", and
provide the Canadian equivalent to International Accounting Standard 27,
"Consolidated and Separate Financial Statements". The new sections will be
applicable to the Company on January 1, 2011. Earlier adoption is permitted as
of the beginning of a fiscal year, in which case an entity would also early
adopt Handbook Section 1582, "Business Combinations", and Handbook Section 1602,
"Non-controlling Interests". The Company is assessing the impact, if any, of the
adoption of these new sections on its consolidated financial statements.
Other accounting pronouncements issued by the CICA with future effective dates
are either not applicable or are not expected to be significant to the financial
statements of the Company.
Comparative figures
Certain of the comparative figures have been reclassified to conform to the
current year's presentation.
3. ACQUISITION OF OUTBACK CAPITAL INC. DBA PINEFALLS GOLDMARKETABLE SECURITIES
At December 31, 2009, PFG held 500,000 common shares of Cougar Minerals Corp.
("PFG"Cougar")
In, a company listed on the TSX Venture Exchange (Note 4). At initial
recognition, each common share was recorded at a fair value of $0.05. As at
December 31, 2009 the closing trading price of Cougar's common shares was $0.125
per common share with a total fair value of $62,500. During the year ended
December 31, 2010, PFG sold 100,000 common shares of Cougar for $8,854,
resulting in a gain of $3,854. Pursuant to the Purchase Agreement, the Company
sold its interest in PFG and therefore does not hold an interest in Cougar at
December 31, 2010 (Note 4). The Company previously classified the investment as
available-for-sale.
4. MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS
Title to mining properties involves certain inherent risks due to the
difficulties of determining the title and extraction rights of certain claims,
as well as the potential for problems arising from the frequently ambiguous
conveyance history characteristic of many mining properties. The Company has
investigated title to all of its mineral properties and, to the best of its
knowledge, title to all of its properties are in good standing.
During the year ending December 31, 2010 the Company had $677,718 (2009 -
$101,000) in property expenditures as detailed in the consolidated schedule of
mineral properties and deferred exploration costs.
At December 31, 2010, the Company held an interest in the following mineral
properties:
Pinefalls Gold
Pursuant to the completion of a subscription agreement and a share exchange
agreement in April 2005, the Company entered into a subscription agreement to invest
$200,000 into Outback Capital Inc. dbaacquired the net assets of PFG including an
interest in the Pinefalls Gold ("PFG"), a private
Alberta company with certain directors and a principal shareholder of PFG in
common with the Company. PFG is an exploration company with mining claimsProperty, located in the areaBissett Area of
Bissett, Manitoba. Pursuant to the subscription, theManitoba, valued at $319,306. The Company invested $90,000 in exchange for 1.8 million units during 2005 and an
additional $110,000 in exchange for 2.2 million units in 2006 of PFG at $0.05
per unit with each unit comprised of one common share and one share purchase
warrant to purchase an additional common share at $0.075 forheld a period of two
years. Without the exercise of the warrants, the Company purchased
approximately 37% of the common shares of PFG. As at June 30, 2006, the
Company had invested $200,000 in exchange for 4 million units under this
subscription agreement.
In addition, the Company entered into a share exchange agreement with one of
the principal shareholders of PFG, who is also a director of the Company,
under which the Company acquired a further 3 million common shares of PFG in
exchange for one million common shares of the Company at a value of $150,000.
As a result of the share exchange agreement, the director in common no longer
had an ownership65.42% interest in PFG.
The Company completed the transactions abovePFG,
effective June 30, 2006;2006.
On April 6, 2009 PFG entered into an Option and as
at December 31, 2007Purchase and Sale Agreement with
Cougar, whereby Cougar was granted an option to purchase certain claims
comprising the Company owned 65.42% of the common shares of PFG.
The Pinefalls Gold mining property is subject to a 2% royalty based onProperty. During the gross cash proceeds received from the sale of minerals, less the cost of
smelting, refining, freight, insurance and other related costs, and the cost
of marketing and sale of minerals derived from PFG properties. The royalty
will be calculated on a cumulative basis and will be payable in cash by the
Company within 180 days of each fiscal year end of the Company.
F-9ended
F-11
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
DECEMBERFor the Year Ended December 31, 20072010
--------------------------------------------------------------------------------
4. MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS - --------------------------------------------------------------------------------
3. ACQUISITION OF OUTBACK CAPITAL INC. DBA PINEFALLS GOLD ("PFG") CONT'D
Thecont'd
Pinefalls Gold - cont'd
December 31, 2009, the Company received $10,000 cash and 500,000 common shares
with a fair value of $26,000 (Note 3) on execution of the assets acquiredAgreement. At December
31, 2009, the Company wrote-down the property to $91,000. The basis of the
impairment was to reflect the net estimated recoverable value of the Pinefalls
Gold Property, based on anticipated future cash flows.
On April 30, 2010, Outback received an additional $25,000 from Cougar. Pursuant
to the Purchase Agreement, the Company sold its interest in PFG and,
liabilities assumed effective June
30, 2006 are as follows:
- $ -
---------
Current assets 126,108
Mineral claims and equipment 320,885
Current liabilities (3,861)
Due to related parties (11,390)
Non controlling interest (81,742)
---------
350,000
=========
CONSIDERATION PAID:
1,000,000 common shares at $0.15 per share 150,000
Cash 200,000
---------
350,000
=========
Mineral Claims and equipment includes the following:
- $ -
---------
Unproven Mining Claims - not subject to depletion 319,306
Equipment 1,579
---------
Totals 320,885
=========
Mineral claims since the acquisition consist of:
- $ -
Total
---------
Balance as at June 30, 2006 319,306
Geological consulting fees 13,852
---------
Balance asaccordingly, at December 31, 2006 333,158
Geological consulting fees 10,773
Filing fees 24
---------
Balance as at2010 no longer holds an interest in the Pinefalls
Gold Property. During the year ended December 31, 2007 343,9552010, the Company incurred
$Nil (2009 - $Nil) in deferred exploration costs on the Pinefalls Gold Property.
The Company realized a loss on the sale of PFG, equal to the amount by which the
carrying value of the net assets disposed of as of May 31, 2010, exceeded the
proceeds of $52,606, as follows:
Assets $ 126,364
Liabilities (30,974)
Non-controlling interest (33,005)
Accumulated other non-controlling interest (2,616)
---------
59,769
Proceeds (52,606)
---------
Loss on sale of investment $ 7,163
=========
Post Creek
On December 23, 2009 the Company executed a letter of intent whereby the Company
has an option to acquire the mineral claim known as the Post Creek Property
located within the Sudbury Mining District of Ontario, and paid a non-refundable
deposit of $7,500.
On April 5, 2010 the Company entered into an option agreement to acquire a 100%
interest in the Post Creek Property and agreed to the following consideration:
Exploration
Date Cash Shares requirements
---- ---- ------ ------------
On or before April 5, 2010 (paid and issued) $12,500 400,000
On or before April 5, 2011 (subsequently paid and issued) $30,000 300,000 $15,000
On or before April 5, 2012 $50,000 300,000 $15,000
On or before April 5, 2013 $50,000 -- $15,000
During the year ended December 31, 2010, the Company incurred $153,3l0 (2009 -
$Nil) in deferred exploration costs on the Post Creek Property.
The Company's interest is subject to a 2.5% NSR, of which 1.5% can be
repurchased by the Company for $1,500,000. Commencing August 1, 2013, if the
Company exercises its option, the Company will be obligated to pay advances on
the NSR of $10,000 per annum, which will be deducted from any payments to be
made under the NSR.
Woods Creek
On December 23, 2009 the Company executed a letter of intent whereby the Company
has an option to acquire the mineral claim known as the Woods Creek Property
located within the Sudbury Mining District of Ontario and paid a non-refundable
deposit of $2,500.
F-12
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
4. MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS - cont'd
Woods Creek - cont'd
On April 5, 2010, the Company entered into an option agreement to acquire up to
a 100% interest in the Woods Creek Property and agreed to the following
consideration:
Exploration
Date Cash Shares requirements
---- ---- ------ ------------
On or before April 5, 2010 (paid and issued) $ 7,500 150,000
On or before April 5, 2011 (subsequently paid and issued) $15,000 150,000 $24,000
On or before April 5, 2012 $20,000 -- $24,000
On or before April 5, 2013 $45,000 -- $24,000
During the year ended December 31, 2010, the Company incurred $20,340 (2009 -
$Nil) in deferred exploration costs on the Woods Creek Property.
The Company's interest is subject to a 2.5% NSR, of which 1.5% can be
repurchased by the Company for $1,500,000. Commencing August 1, 2013, if the
Company exercises its option, the Company will be obligated to pay advances on
the NSR of $5,000 per annum, which will be deducted from any payments to be made
under the NSR.
Halcyon
On April 5, 2010, the Company entered into an option agreement to acquire up to
a 100% interest in the Halcyon Property located Ontario and agreed to the
following consideration:
Exploration
Date Cash Shares requirements
---- ---- ------ ------------
On or before April 5, 2010 (paid and issued) $15,000 300,000
On or before April 5, 2011 (subsequently paid and issued) $25,000 200,000 $22,000
On or before April 5, 2012 $35,000 -- $22,000
On or before April 5, 2013 $35,000 -- $22,000
During the year ended December 31, 2010, the Company incurred $Nil (2009 - $Nil)
in deferred exploration costs on the Halcyon Property.
The Company's interest is subject to a 2.5% NSR, of which 1.5% can be
repurchased by the Company for $1,500,000. Commencing August 1, 2013, if the
Company exercises its option, the Company will be obligated to pay advances on
the NSR of $8,000 per annum, which will be deducted from any payments to be made
under the NSR.
Bell Lake
On April 5, 2010, the Company entered into an option agreement to acquire up to
a 100% interest in the Bell Lake Property located in Ontario, and agreed to the
following consideration:
Exploration
Date Cash Shares requirements
---- ---- ------ ------------
On or before April 5, 2010 (paid and issued) $25,000 300,000
On or before April 5, 2011 (subsequently paid and issued) $25,000 300,000 $ --
On or before April 5, 2012 $40,000 400,000 $ --
On or before April 5, 2013 $40,000 -- $ --
On or before April 5, 2013 $80,000 -- $ --
During the year ended December 31, 2010, the Company incurred $560 (2009 - $Nil)
in deferred exploration costs on the Bell Lake Property.
F-13
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
4. MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS - cont'd
Bell Lake - cont'd
The Company's interest is subject to a 2.5% NSR, of which 1.5% can be
repurchased by the Company for $1,500,000. Commencing August 1, 2014, once the
Company exercises its option, the Company will be obligated to pay advances on
the NSR of $5,000 per annum, which will be deducted from any payments to be made
under the NSR.
Manitoba Nickel
On April 5, 2010, the Company entered into a purchase and sale agreement, with a
company with directors in common, to acquire a 100% interest in the Thompson
North, South Bay and Cedar Lake properties located in Manitoba, and agreed to
consideration of $1,000 cash (paid) and 6,000,000 common shares (issued).The
Company's interest is subject to a 2% NSR, of which 1% can be repurchased by the
Company for $1,000,000.
(a) Thompson North Property
During the year ended December 31, 2010, the Company incurred $585 (2009 -
$Nil) in deferred exploration costs on the Thompson North Property.
(b) South Bay Property
During the year ended December 31, 2010, the Company incurred $2,523 (2009
- $Nil) in deferred exploration costs on the South Bay Property.
(c) Cedar Property
During the year ended December 31, 2010, the Company incurred $400 (2009 -
$Nil) in deferred exploration costs on the Cedar Property.
5. EQUIPMENT
2010 2009
Accumulated Net book Accumulated Net book
Cost amortization value Cost amortization Disposal value
---- ------------ ----- ---- ------------ -------- -----
Computer hardware $ -- $ -- $ -- $1,579 $ (863) $ (716) $ --
====== ====== ====== ====== ====== ====== ======
6. RELATED PARTY TRANSACTIONS
During the year ended December 31, 2007,2010, the Company entered into the following
transactions with related parties:
(a) recorded $19,000 (2009 - $Nil; 2008 - $Nil) for consulting fees to a
company in which a director has an interest;
(b) recorded $90,000 (2009- $24,000; 2008 - $24,000) for management fees a
director of the Company and to a company in which a director has an
interest;
(c) recorded $28,000 (2009 - $Nil; 2008 - $Nil) for geological consulting fees
to a director of the Company, of which $26,833 (2009 - $Nil; 2008 - $Nil)
has been recorded in consulting services as deferred exploration costs for
mineral properties and $1,167 (2009 - $Nil; 2008 - $Nil) has been recorded
in consulting fees on the statements of operations;
(d) recorded $11,772 (2009 - $Nil; 2008 - $Nil) for professional fees to a
company in which a director has an interest;
(e) entered into a purchase and sale agreement, with a company with directors
in common for the acquisition mineral properties (Note 4); and
(f) issued 2,640,000 common shares at a fair value of $132,000, to a company in
which a director has an interest chargedfor settlement of debt.
F-14
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Company $24,000 (2006: $24,000) for rent and management
fees. The unpaid portion of these amounts, plus additional advances and other
amounts due to directors, aggregating $87,280 (2006: $72,350) is included in
accounts payable and accrued liabilities atConsolidated Financial Statements
For the Year Ended December 31, 2007.
The Company charged $nil (2006: $9,000) for rent and management fees to PFG
prior to the acquisition date.2010
--------------------------------------------------------------------------------
6. RELATED PARTY TRANSACTIONS - cont'd
Related party transactions were in the normal course of business and have been
recorded at the exchange amount which is the fair value agreed to between the
parties.
At December 31, 2010, recorded in due to related parties is $87,094 (2009 -
$132,333) owing to directors of the Company and companies in directors have an
interest. Amounts due to related parties are unsecured, non-interest bearing and
without specific terms of repayment.
F-10
WIDESCOPE RESOURCES INC.
Notes to the Consolidated Financial Statements
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
5.7. SHARE CAPITAL
a) The authorized capital of the Company comprises 100,000,000an unlimited number of
common shares without par value and 100,000,000 Series 1 convertible
preferred shares without par value.
b) Common shares issued and outstanding
Number of Contributed
shares Amount surplus
----------- ----------- -----------
Balance, December 31, 2008 and 2009 5,441,730 $13,044,609 $ 53,344
Shares issued for debt 2,640,000 132,000 --
Shares issued for mineral properties 7,150,000 429,000 --
Shares issued for private placement 20,000,000 1,100,000 --
Stock-based compensation -- -- 182,500
----------- ----------- -----------
Balance, December 31, 2010 35,231,730 $14,705,609 $ 235,844
=========== =========== ===========
Effective April 19, 2010, the Company consolidated its common share capital on a
2:1 basis, whereby each two old shares are equal to one new share and increased
its authorized capital from 100,000,000 common shares without par value to an
unlimited number of common shares without par value. All references to common
shares, stock options, warrants and weighted average number of shares
outstanding in these consolidated financial statements reflect the share
consolidation.
Year ended December 31, 2010:
The Company issued 2,640,000 common shares at a fair value of $132,000 for
settlement of debt (Note 6).
The Company completed a non-brokered private placement of 10,000,000 common
shares for proceeds of $500,000 and 10,000,000 units for proceeds of $600,000.
Each unit consists of one common share and one share purchase warrant. Each
warrant is exercisable into one common share of the Company at $0.10 per share
until December 28, 2012. The Company does not separately disclose the value
attributed to the warrants.
The Company issued 7,150,000 common shares at a fair value of $429,000 for the
acquisition of mineral properties (Note 4).
c) Preferred shares issued and outstanding
At December 31, 2010 and 2009, there are 604,724 (2009 - 604,724) preferred
common shares outstanding. The rights and restrictions of the preferred shares
are as follows:
i) dividends shall be paid at the discretion of the directors;
ii) the holders of the preferred shares are not entitled to vote except at
meetings of the holders of the
F-15
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
7. SHARE CAPITAL - cont'd
c) Preferred shares issued and outstanding - cont'd
ii) - cont'd
preferred shares, where they are entitled to one vote for each
preferred share held;
iii) the shares are convertible at any time; and
iv) the number of the common shares to be received on conversion of the
preferred shares is to be determined by dividing the conversion value
of the share, $1 per share, by $0.45.
b) Common shares
2007 2006
-------------------------- --------------------------
Shares $ Shares $
---------- ---------- ---------- ----------
Balance, beginning of year 10,883,452 13,044,609 9,883,452 12,894,609
Issued on acquisition of PFG
(Note 3) -- -- 1,000,000 150,000
---------- ---------- ---------- ----------
Balance, December 31 10,883,452 13,044,609 10,883,452 13,044,609
========== ========== ========== ==========
c) Preferred shares
2007 2006
-------------------------- --------------------------
Shares $ Shares $
---------- ---------- ---------- ----------
Balance, beginning and end of year 604,724 604,724 604,724 604,724
========== ========== ========== ==========
d) Warrants
2007 2006
---------- ----------
Balance, beginning and end of year 1,560,333 1,560,333
========== ==========
Each warrant gives the holder the right to purchase one$0.90.
d) Warrants
A continuity schedule of outstanding common share purchase warrants at December
31, 2010 is as follows:
Number of Weighted average
warrants exercise price
-------- --------------
Balance, December 31, 2008 and 2009 -- $ --
Granted 10,000,000 0.10
---------- -----
Balance, December 31, 2010 10,000,000 $0.10
========== =====
At December 31, 2010, the Company had outstanding common share purchase warrants
exercisable to acquire common shares of the Company at $0.18 per share on or beforeas follows:
Weighted average
Number of Exercise remaining life
warrants Expiry date price (years)
-------- ----------- ----- -------
10,000,000 December 28, 2012 $0.10 1.99 years
========== ================= ===== ==========
e) Stock options
The Company has entered into a Stock Option Plan (the "Plan"), providing the
expiryauthority to grant options to directors, officers, employees and consultants
enabling them to acquire up to 10% of the warrantsissued and outstanding common stock of
the Company. Under the Plan, the exercise price of each option equals the market
price or a discounted price of the Company's stock as calculated on June 6,
2008.
e) Stock Options
Asthe date of
grant. The options can be granted for a maximum term of 10 years.
The Company calculates the fair value of all stock-based compensation awards
using the Black-Scholes option pricing model.
During the year ended December 31, 2007 and 2006, there were no2010, the Company granted 3,300,000 incentive
stock options outstanding.
F-11to directors, officers and employees. The granting of these
options resulted in stock-based compensation expense of $182,500 which was
recorded as stock-based compensation expense on the statements of operations.
The options granted vested upon issuance.
F-16
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
DECEMBERFor the Year Ended December 31, 20072010
--------------------------------------------------------------------------------
7. SHARE CAPITAL - --------------------------------------------------------------------------------
6. INCOME TAXEScont'd
e) Stock options - cont'd
The weighted average fair value of stock options granted during the year ended
December 31, 2010 was $0.055. The following assumptions were used for the
Black-Scholes valuation of stock options during the year:
2010 2009
---- ----
Risk-free interest rate 2.16% --
Expected life 5 years --
Annualized volatility 214.74% --
Dividend yield 0% --
====== =====
A reconciliationcontinuity schedule of income taxesoutstanding stock options at statutory rates with the reported taxesDecember 31, 2010 is as
follows:
2007 2006
-------- --------
Loss before income taxes $ 49,759 $ 37,147
======== ========
Income tax recovery at statutory rates
$ 16,978 $ 12,667
Unrecognized benefitNumber of non-capital losses (16,978) (12,667)
-------- --------
Future income tax provision $Weighted average
options exercise price
------- --------------
Balance, December 31, 2008 and 2009 -- $ --
======== ========
The significant componentsGranted 3,300,000 0.10
--------- -----
Balance, December 31, 2010 3,300,000 $0.10
========= =====
At December 31, 2010, the Company had stock options outstanding exercisable to
acquire common shares of the Company's future income tax assets areCompany as follows:
2007 2006
-------- --------
Future income tax assets:
Non-capital loss carry forward benefitNumber of Number of Weighted average
options options Exercise remaining life
outstanding exercisable Expiry date price (years)
----------- ----------- ----------- ----- -------
2,950,000 2,950,000 August 27, 2015 $ 81,500 $ 74,481
Capital losses carried forward 1,250 1,506
Valuation allowance (82,750) (75,987)
-------- --------
Net future income tax asset $ -- $ --
======== ========0.10 4.66
150,000 150,000 November 25, 2015 0.10 4.90
200,000 200,000 December 8, 2015 0.10 4.94
---------- ---------- ------
3,300,000 3,300,000 4.69
========== ========== ======
8. INCOME TAXES
The Company has approximately $261,000$572,000 in non-capital losses that can be offset
against taxable income in future years which expirebegan expiring at various dates
commencing in 20072009, and approximately $8,000$157,000 in capital losses which may be
available to offset future taxable capital gains which can be carried forward
indefinitely. The potential future tax benefit of these losses has not been
recorded as a full-future tax asset valuation allowance has been provided due to
the uncertainty regarding the realization of these losses.
The related potential income tax benefits with respect to these items have not
been recorded in the accounts.
ApplicationF-17
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
8. INCOME TAXES - cont'd
A reconciliation of income taxes at statutory rates with the reported taxes is
as follows:
2010 2009 2008
--------- --------- ---------
Loss before income taxes: $ 529,808 $ 117,645 $ 200,977
Statutory rates 28.50% 31.00% 31.00%
--------- --------- ---------
Expected income tax recovery 150,995 36,470 62,303
Non-controlling interest -- 3,389 2,668
Effect of reduction in tax rates (4,632) (4,227) (25,427)
Permanent differences and expirationother (71,983) (4,100) 14,307
Expiring losses -- (10,932) (7,194)
Non-allowable portion of capital loss (42,380) -- --
Increase in valuation allowance (32,000) (20,600) (46,657)
--------- --------- ---------
Net future income tax recovery $ -- $ -- $ --
========= ========= =========
The significant components of the Company's future income tax assets are as
follows:
2010 2009
--------- ---------
Non-capital loss carry forward benefit $ 143,000 $ 92,000
Capital losses carried forward 39,000 2,000
Mining properties -- 56,000
Valuation allowance (182,000) (150,000)
--------- ---------
Net future income tax asset $ -- $ --
========= =========
9. CAPITAL MANAGEMENT
The Company manages its capital structure, which consists of share and working
capital, and makes adjustments to it, based on the funds available to the
Company, in order to support the acquisition, exploration and development of
mineral properties. The Board of Directors does not establish quantitative
return on capital criteria for management, but rather relies on the expertise of
the Company's management to sustain future development of the business.
The properties in which the Company currently has an interest are in the
exploration stage; as such the Company is dependent on external financing to
fund its activities. In order to carry out the planned exploration and pay for
administrative costs, the Company will spend its existing cash and raise
additional amounts as needed. The Company will continue to assess new properties
and seek to acquire interests in additional properties.
Management reviews its capital management approach on an ongoing basis and
believes that this approach, given the relative size and nature of the Company,
is reasonable.
There were no changes in the Company's approach to capital management during the
years ended December 31, 2010 and 2009. The Company is not exposed to externally
imposed capital requirements.
F-18
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
10. FINANCIAL INSTRUMENTS AND RISK FACTORS
The Company's financial instruments consist of cash, receivables, marketable
securities, accounts payable and due to related parties. The carrying value of
these carryforward balancesfinancial instruments approximates their fair value. Cash is measured
based on Level 1 inputs of the fair value hierarchy.
The Company is engaged primarily in the mineral exploration field and manages
related industry risk issues directly.
The Company is potentially at risk for environmental reclamation and
fluctuations in commodity based market prices associated with resource property
interests. Management is of the opinion that the Company addresses environmental
risk and compliance in accordance with industry standards and specific project
environmental requirements. There is no certainty that all environmental risks
and contingencies have been addressed.
The Company's primary risk exposures are summarized below:
Credit risk
The Company's credit risk is primarily attributable to its cash accounts. This
risk is managed through the use of major banks which are high credit quality
financial institutions as determined by rating agencies. The Company's secondary
exposure to credit risk is on its receivables. Receivables include primarily
goods and services tax due from the Federal Government of Canada. Management
believes that the Company has no significant concentration of credit risk
arising from operations
Liquidity risk
The Company's approach to managing liquidity risk is to ensure that it will have
sufficient liquidity to meet third party liabilities when due. The Company has
working capital of $556,665 at December 31, 2010. All of the Company's
liabilities have contractual maturities of less than 30 days and are subject to
relevant provisionsnormal trade terms. The Company is dependent on management's ability to raise
additional funds so that it can manage its financial obligations. The ability to
raise funds in capital markets is impacted by general market and economic
conditions and the commodity markets in which the Company conducts business.
Market risk
(a) Interest rate risk
The Company has cash balances and no interest-bearing debt therefore, interest
rate risk is minimal.
(b) Foreign currency risk
The Company's functional currency is the Canadian dollar and major purchases are
transacted in Canadian dollars: therefore, foreign currency risk is minimal.
11. SUPPLEMENTAL CASH FLOW INFORMATION
The Company incurred non-cash financing and investing activities during the year
ended December 31, 2010 as follows:
2010 2009
---- ----
Common shares issued for debt (Note 6) $132,000 $ --
Accrued mineral property and deferred exploration costs $ 2,825 $ --
Common shares issued for mineral properties (Note 4) $429,000 $ --
======== =====
F-19
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
12. COMMITMENTS
Effective May 1, 2010, the Company entered into the following agreements for
services with directors of the Income Tax
Act, Canada.
7.Company and a company in which a director has an
interest:
i) management fees: $5,000 per month and $4,000 per month
ii) consulting fees: $3,500 per month
Each of the agreements shall be continuous and may only be terminated by mutual
agreement of the parties, subject to the provisions that in the event there is a
change of effective control of the Company, the party shall have the right to
terminate the agreement, within sixty days from the date of such change of
effective control, upon written notice to the Company. Within thirty days from
the date of delivery of such notice, the Company shall forward to the party the
amount of money due and owing to the party hereunder to the extent accrued to
the employee to the effective date of termination.
13. RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles ("Canadian GAAP"),GAAP, which differs in certain respects from United States generally accepted accounting principles
("US GAAP").GAAP. A description of
US GAAP and practices prescribed by the US Securities and Exchange Commission
("SEC") that result in material measurement and disclosure differences from
Canadian GAAP are summarized as follows:
F-12Consolidated Balance Sheets
2010 2009
----------- -----------
Total assets under Canadian GAAP $ 1,363,910 $ 184,212
(a) Mineral property exploration costs expensed under USGAAP (177,718) (31,138)
----------- -----------
Total assets under US GAAP $ 1,186,192 $ 153,074
=========== ===========
Total liabilities under Canadian and US GAAP $ 129,527 $ 185,747
=========== ===========
Non-controlling interest under Canadian GAAP $ -- $ 53,249
(a) Non-controlling interest in mineral property exploration costs
expensed under US GAAP -- (10,774)
----------- -----------
Non-controlling interest under US GAAP $ -- $ 42,475
=========== ===========
Total shareholders' equity (deficit) under Canadian GAAP $ 1,234,383 $ (54,784)
(a) Mineral property exploration costs expensed under US GAAP (208,856) (31,138)
(a) Non-controlling interest in mineral property exploration costs
expensed under US GAAP 10,774 10,774
----------- -----------
Total shareholders' equity (deficit) under US GAAP $ 1,036,301 $ (75,148)
=========== ===========
F-20
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
DECEMBERFor the Year Ended December 31, 2007
-2010
--------------------------------------------------------------------------------
7. RECONCILIATION13. RECONCILATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES CONT'D
December 31, December 31,
2007 2006
--------- ---------
Consolidated Balance Sheets
Total assets under Canadian GAAP $ 418,294 $ 443,765
(a) Mineral property exploration and acquisition
costs expensed under US GAAP (343,955) (333,158)
--------- ---------
Total assets under US GAAP $ 74,339 $ 110,607
========= =========
Total liabilities under Canadian and US GAAP $ 110,395 $ 77,426
========= =========
Non-controlling interest under Canadian and US
GAAP $ 68,586 $ 77,267
========= =========
Total shareholders' equity under Canadian GAAP $ 239,313 $ 289,072
(a) Mineral property exploration and acquisition
costs expensed under US GAAP (343,955) (333,158)
--------- ---------
Total shareholders' equity (deficit) under US GAAP $(104,642) $ (44,086)
========= =========
Year ended Year ended Year ended
December 31, December 31, December 31,
2007 2006 2005
--------- --------- ---------PRINCIPELS - cont'd
Consolidated Statements of Operations and Deficit
Years ended December 31,
2010 2009 2008
----------- ----------- -----------
Net loss under Canadian GAAP $ (49,759)(529,808) $ (37,147)(117,645) $ (54,804)(200,977)
(a) Mineral property exploration and acquisition costs expensed
under US GAAP (10,797) (333,158)(177,718) -- --------- --------- ---------(6,490)
(a) Non-controlling interest in mineral property
exploration costs expensed under US GAAP -- -- 2,246
(c) Loss on sale of subsidiary 14,208 -- --
----------- ----------- -----------
Net loss under US GAAP (693,318) (117,645) (205,221)
Accumulated other comprehensive income (loss) (24,525) 24,525 --
----------- ----------- -----------
Comprehensive loss - US GAAP $ (60,556) $(370,305)(717,843) $ (54,804)
========= ========= =========(93,120) $ (205,221)
=========== =========== ===========
Basic and diluted loss per share under US GAAP $ (0.01)(0.04) $ (0.02) $ (0.04)
$ (0.01)
========= ========= =========
F-13
WIDESCOPE RESOURCES INC.
Notes to the Consolidated Financial Statements
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
7. RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES CONT'D
Year ended Year ended Year ended
December 31, December 31, December 31,
2007 2006 2005
--------- --------- ---------
=========== =========== ===========
Consolidated Statements of Cash Flows
Net cash used in operating activities under
Canadian GAAP $ (25,079)(282,855) $ (24,878)(24,146) $ (47,396)(22,477)
(b) Mineral property exploration costs incurred (10,797) (13,852)(177,843) -- --------- --------- ---------(6,490)
----------- ----------- -----------
Net cash used in operating activities under
US GAAP $ (35,876)(460,573) $ (38,730)(24,146) $ (47,396)
========= ========= =========(28,967)
=========== =========== ===========
Net cash provided by (used in) investing activities
under Canadian GAAP $ (10,797)(174,433) $ 2,256-- $ (60,000)(6,490)
(b) Mineral property exploration costs incurred 10,797 13,852177,718 -- --------- --------- ---------6,490
----------- ----------- -----------
Net cash provided by (used in) investing activities
under US GAAP $ 3,285 $ -- $ 16,108 $ (60,000)
========= ========= =========--
=========== =========== ===========
Net cash provided by financing activities under
Canadian and US GAAP $ 1,100,000 $ -- $ --
$ 234,050
========= ========= ==================== =========== ===========
(A) INTEREST IN UNPROVEN MINERAL PROPERTIESF-21
NORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2010
--------------------------------------------------------------------------------
13. RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES - cont'd
(a) Interest in unproven mineral properties
In accordance with Canadian GAAP, the cost of mineral properties and related
exploration and development costs are deferred until the properties are placed
into production, sold, abandoned or management has determined there to be
impairment.
In accordance with US GAAP, mineral property acquisition costs are initially
capitalized when incurred using the guidance in EITF 04-02, "Whether Mineral
Rights Are Tangible or Intangible Assets" and in accordance with Financial
Accounting Standards Board ("FASB") SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", the carrying value of intangible assets and other
long-lived assets is reviewed on a regular basis for the existence of facts or
circumstances that may suggest impairment. The Company recognizes impairment
when the sum of the expected undiscounted future cash flows is less than the
carrying amount of the asset. Mineral property exploration costs are generally
expensed as incurred until commercially minable deposits are determined to exist
within a particular property as cash flows cannot be reasonably estimated prior
to such determinationdetermination.
Accordingly, for all periods presented, the Company has expensed all mineral
property exploration costs for US GAAP. During 2009, the Company optioned some
of its mineral property interest. Under Canadian GAAP, purposes and impaired the Company will record
the option proceeds against the carrying value of the mineral property acquisitionwhile for
US GAAP, the Company will record the option proceeds as a recovery of mineral
property costs on the statement of operations.
(b) Mineral property costs incurred during the period (see Note 3).
F-14
WIDESCOPE RESOURCES INC.
Notes to the Consolidated Financial Statements
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
7. RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES CONT'D
(B) MINERAL PROPERTY COSTS INCURRED
Under Canadian GAAP, cash flows relating to mineral property acquisition and
exploration costs and option proceeds received are reported as investing
activities. Under US GAAP, theseexploration costs are classified as operating
activities. The net cash provided by (used in) operating and investing
activities has been adjusted accordingly for all periods presented.
(C) RECENT ACCOUNTING PRONOUNCEMENTS -(c) Loss on sale of subsidiary
As described in (a) above, there is a difference between the basis for
capitalization, expensing and mineral property exploration and development costs
between Canadian GAAP and US GAAP. To the extent that mineral properties are
owned by the Company's subsidiary, this difference gives rise to different
carrying values in the subsidiary mineral properties and the non-controlling
interests in the Company's subsidiary under US GAAP as compared to Canadian
GAAP. Accordingly, upon sale of the underlying subsidiary, the resulting gain or
loss is different between Canadian GAAP and US GAAP.
(d) Income taxes
Under US GAAP, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. Under Canadian GAAP, the effect of a change in tax rates is recognized in
the period of substantive enactment. The application of this difference under US
GAAP does not result in a material difference between future income taxes as
recorded under Canadian GAAP.
(e) Recent accounting pronouncements
In March 2008,January 2010, the FASB issued SFAS No. 161, "DisclosuresASU 2010-06, Improving Disclosures about Derivative
Instruments and Hedging Activities" ("SFAS 161"). SFAS 161Fair
Value Measurements, which is intended to
improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entity's financial position, financial
performance, and cash flows. SFAS 161 achieves these improvements by
requiring disclosure of the fair values of derivative instruments and their
gains and losses in a tabular format. It also provides more information about
an entity's liquidity by requiring disclosure of derivative features that are
credit risk-related. Finally, it requires cross-referencing within footnotes
to enable financial statement users to locate important information about
derivative instruments. SFAS 161 will be effective for financial statements
issued for fiscal years and interim periods beginning after November 15,
2008, and will be adopted by the Company beginningincluded in the first quarter of
2009. The Company does not expect there to be any significant impact of
adopting SFAS 161 on its financial position or results of operations.
On December 21, 2007, the SecuritiesASC Topic 820 (Fair Value
Measurements and Exchange Commission issued Staff
Accounting Bulletin No. 110, ("SAB 110")Disclosures). SAB 110 provides guidance to
issuersASU 2010-06 requires new disclosures on the
method allowedamount and reason for transfers in developing estimatesand out of expected term of
"plain vanilla" share options in accordance with SFAS No. 123(R),
"Share-Based Payment". The staff will continue to accept, under certain
circumstances, the use of a simplified method beyond December 31, 2007 which
amends question 6 of Section D.2 as included in SAB 107, "Valuation of
Share-Based Payment Arrangements for Public Companies", which stated that the
simplified method could not be used beyond December 31, 2007. SAB 110 is
effective JanuaryLevel 1 2008. The Company is currently evaluating the potential
impact, if any, that the adoption of SAB 110 will have on its consolidated
financial statements.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 5"1 ("SFAS No.
160"), which will change the accounting and reporting for minority interests,
which will be recharacterized as noncontrolling interests and classified as a
component of equity within the consolidated balance sheets. SFAS No. 160 is
effective as of the beginning of an entity's first fiscal year beginning on
or after December 15, 2008. Earlier adoption is prohibited. Management has
not determined the effect that adopting this statement would have on the
Company's financial position or results of operations.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business
Combinations" ("SFAS No. 141R"). SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition-date2 fair value
with limited exceptions. SFAS
No. 141R will change the accounting treatment and disclosure for certain
specific items in a business combination. SFAS No. 141R applies prospectively
to business combinations for which the acquisition date is on or after the
beginningmeasurements. ASU 2010-06 also requires disclosures of the entity's first annual reporting period beginning on or after
December 15, 2008. Accordingly, any business combinations completed by the
Company prior to January 1, 2009 will be recorded and disclosed following
existing GAAP. Management has not determined the effect that adopting this
statement would have on the Company's financial position or results of
operations.
F-15activities, including
F-22
WIDESCOPE RESOURCESNORTH AMERICAN NICKEL INC.
(formerly Widescope Resources Inc.)
Notes to the Consolidated Financial Statements
DECEMBERFor the Year Ended December 31, 2007
-2010
--------------------------------------------------------------------------------
7.13. RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES CONT'D
(C) RECENT ACCOUNTING PRONOUNCEMENTS - US GAAP CONT'D
In February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, "The Fair Value Option for Financial Assetscont'd
(e) Recent accounting pronouncements - cont'd
purchases, sales, issuances, and Financial
Liabilities - Including an amendment of FASB Statement No. 115" ("SFAS No.
159"). This statement permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings cause by measuring related assets
and liabilities differently without having to apply complex hedge accounting
provisions. This Statement is expected to expand the use of fair value
measurement, which is consistent with the Board's long-term measurement
objectives for accounting for financial instruments. This statement is
effective as of the beginning of the Company's first fiscal year that begins
after November 15, 2007, although earlier adoption is permitted. Management
has not determined the effect that adopting this statement would have on the
Company's financial position or results of operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures". This
Statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), expands disclosures
aboutsettlement within Level 3 fair value
measurements and applies under other accounting
pronouncements that require or permitclarifies existing disclosure requirements on levels of
disaggregation and disclosures about inputs and valuation techniques. ASU
2010-06 is effective for interim and annual reporting periods beginning after
December 15, 2009 except for the disclosures about purchases, sales, issuances,
and settlements in the roll forward of activity in Level 3 fair value
measurements. SFAS No. 157
does not require any new fair value measurements. However, the FASB
anticipates that for some entities, the application of SFAS No. 157 will
change current practice. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007, which for the
Company would be the fiscal year beginning January 1, 2008. The adoption of
this statement is not expected to have an effect on the Company's future
reported financial position or results of operations.
In June 2006, FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes-an Interpretation of FASB Statement No. 109" ("FIN 48"). This
Interpretation clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB
No. 109, "Accounting for Income Taxes." This Interpretation prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken
in a tax return. This Interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. This Interpretation isThose disclosures are effective for fiscal years beginning after
December 15, 2006.2010, and for interim periods within those fiscal years. The
Company has determined thatimplementation of the adoption of Statement No. 158 during the year didASU 2010-06 has not have anyhad a material impact on
the Company's results of operations orconsolidated financial position.statements.
In March 2006,February 2010, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets, anASU 2010-09, "Subsequent Events (Topic 855)
Amendments to Certain Recognition and Disclosure Requirements". The amendment of FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". This statement requires all separately recognized servicing
assets and servicing liabilities be initially measured at fair value, if
practicable, and permits for subsequent measurement using either fair value
measurement with changes in fair value reflected in earnings or the
amortization and impairment requirements of Statement No. 140. The subsequent
measurement of separately recognized servicing assets and servicing
liabilities at fair value
eliminates the necessityrequirement for entities that manageSEC filers to disclose the risks inherent in servicing assets and servicing liabilities with
derivatives to qualify for hedgedate through which
subsequent events have been evaluated. This standard had no impact on the
Company's consolidated financial statements.
There are several new accounting treatment and eliminatespronouncements issued by FASB which are not yet
effective. Each of these pronouncements, as applicable, has been or will be
adopted by the characterizationCompany. Management does not believe any of declines in fair value as impairmentsthese accounting
pronouncements has had or direct
write-downs. SFAS No. 156 is effective for an entity's first fiscal year
beginning after September 15, 2006. The adoption of this statement did notwill have an effecta material impact on the Company's financial
position or results of operations.
F-16
WIDESCOPE RESOURCES INC.
Notesoperating results.
14. SUBSEQUENT EVENTS
Subsequent to December 31, 2010, the Company paid $30,000 and issued 300,000
common shares pursuant to the Consolidated Financial Statements
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
7. RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES CONT'D
(D) RECENT ACCOUNTING PRONOUNCEMENTS - US GAAP CONT'D
In February 2006,Post Creek Property option agreement, paid $15,000
and issued 150,000 common shares pursuant to the FASBWoods Creek Property option
agreement, paid $25,000 and issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments-an amendment of FASB Statements No. 133200,000 common shares pursuant to the Halcyon
Property option agreement and 140",paid $25,000 and issued 300,000 common shares
pursuant to simplify and make more consistent the accounting for certain
financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", to permit fair value
remeasurement for any hybrid financial instrument with an embedded derivative
that otherwise would require bifurcation, provided that the whole instrument
is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140,
"Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a
qualifying special-purpose entity to hold a derivative financial instrument
that pertains to a beneficial interest other than another derivative
financial instrument. SFAS No. 155 applies to all financial instruments
acquired or issued after the beginning of an entity's first fiscal year
beginning after September 15, 2006, with earlier application allowed. The
adoption of this statement did not have an effect on the Company's financial
position or results of operations.
F-17Bell Lake Property option agreement (Note 4).
F-23